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`20-378 (L)
`New York State Nurses Association Benefits Fund v. The Nyack Hospital
`
`
`In the
`United States Court of Appeals
`For the Second Circuit
`______________
`
`August Term, 2020
`
`
`(Argued: February 22, 2021
`
`Decided: August 19, 2022)
`
`
`Docket Nos. 20-378, 20-425
`______________
`
`NEW YORK STATE NURSES ASSOCIATION BENEFITS FUND, THROUGH THE
`CHAIRPERSON OF THE BOARD OF TRUSTEES, DENNIS BUCHANAN, AND THE
`SECRETARY OF THE BOARD OF TRUSTEES, NANCY KALEDA,
`
`Plaintiff–Appellant-Cross-Appellee,
`
`
`
`
`
`–v.–
`
`THE NYACK HOSPITAL,
`
`Defendant-Appellee-Cross-Appellant.
`______________
`
`
`Before:
`
`
`
`
`CARNEY and NARDINI, Circuit Judges, and LIMAN, District Judge.∗
`______________
`
`
`This case concerns the scope of the audit authority of a multi-employer employee
`benefit fund covered by the Employee Retirement Income Security Act (“ERISA”). The
`
`
`
`∗ Judge Lewis J. Liman of the United States District Court for the Southern District of New York,
`sitting by designation.
`
`

`

`New York State Nurses Association Benefit Fund (the “Fund”) sought an audit of the
`Nyack Hospital’s (the “Hospital’s”) payroll and wage records. The Hospital objected,
`claiming that the Fund had the authority to inspect only the payroll records of
`employees the Hospital identified as members of the collective bargaining unit. The
`district court (Briccetti, J.) held that the Fund was entitled to the records of all persons
`the Hospital identified as registered nurses but not to the records of any other
`employees.
`We reverse in part and affirm in part. To the extent the district court granted the
`Hospital’s cross-motion for summary judgment and denied the Fund’s motion for
`summary judgment, we reverse. To the extent the district court granted the Fund’s
`motion for summary judgment and denied the Hospital’s cross-motion for summary
`judgment, we affirm. We hold that the audit sought by the Fund was authorized by the
`Trust Agreement, and that the Hospital did not present evidence that the audit
`constituted a breach of the Fund’s fiduciary duty under ERISA. Accordingly, the audit
`was within the scope of the Fund trustees’ authority under the Supreme Court’s
`decision in Central States, Southeast and Southwest Areas Pension Fund v. Central Transport,
`Inc., 472 U.S. 559 (1985).
`REVERSED IN PART AND AFFIRMED IN PART.
`
`Judge Carney dissents in part in a separate opinion.
`______________
`
`
`JAY P. WARREN (Kyle P. Flaherty, on the brief), Bryan Cave
`Leighton Paisner LLP, New York, NY, for New York
`State Nurses Association Benefits Fund.
`
`
`JOHN HOUSTON POPE (James S. Frank, on the brief) Epstein
`Becker & Green, New York, NY, for the Nyack Hospital.
`
`
`
`______________
`
`LIMAN, District Judge:
`
`New York State Nurses Association Benefits Fund (the “Fund” or the “Plan”)
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`appeals from an order of the district court (Briccetti, J.), granting in part and denying in
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`part its motion for summary judgment and determining the scope of the payroll records
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`of Nyack Hospital (“Nyack” or the “Hospital”) to which the Fund was entitled in
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`

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`connection with an audit of Nyack. The district court held that the Fund was entitled to
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`only the payroll records of persons identified by Nyack as potential Plan beneficiaries,
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`i.e., registered nurses (“RNs”), and not to the records of other employees to determine
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`whether they should have been classified as Plan beneficiaries. The Fund appeals,
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`arguing that the district court erred in narrowing the audit and holding that Nyack was
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`required under an agreement governing the Fund (defined herein as the Trust
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`Agreement) to provide only the payroll records of persons Nyack identified as RNs.
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`Nyack cross-appeals, arguing that the district court authorized an audit that was too
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`broad and that the Fund is entitled to audit only the records of those employees Nyack
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`has identified as members of the collective bargaining unit. For the following reasons,
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`the decision of the district court is AFFIRMED IN PART and REVERSED IN PART.
`
`BACKGROUND
`
`The following facts are taken from the summary judgment record and were
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`undisputed in the district court. They are taken as undisputed for purposes of this
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`appeal.
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`I.
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`The Parties’ Agreement
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`The Fund is a multiemployer fringe benefit fund governed by the Employee
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`Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq. (“ERISA”). The Fund
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`provides health and welfare benefits to employees of hospitals that are parties to
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`collective bargaining agreements (“CBAs”) with the New York State Nurses Association
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`(“NYSNA”). The Fund is governed by the Second Amended and Restated Agreement
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`and Declaration of Trust Establishing the New York State Nurses Association Benefits
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`Fund (the “Trust Agreement”).
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`Nyack is a hospital serving the Rockland County area. It has approximately
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`1,400 full- and part-time employees. It is a party to a CBA with NYSNA that covers
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`certain of its employees and was signed on October 5, 2016.1 The CBA “covers all full-
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`time, regular part-time and per diem registered professional nurses employed by
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`[Nyack], including every person lawfully authorized by permit to practice as a
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`registered professional nurse” with certain exclusions set forth in the CBA. A-150.
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`Three other unions also have CBAs with Nyack; these CBAs cover other groups of its
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`employees.
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`Several provisions of the CBA are relevant here. Section 9 of the CBA makes
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`regular full-time and part-time employees eligible for coverage under the Fund. Per
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`diem employees and temporary employees are not eligible for health benefits.2 No
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`persons other than those represented by NYSNA are eligible for participation in the
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`Fund. Section 9 of the CBA also requires Nyack to “contribute to the [Fund] an annual
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`sum paid in monthly increments uniformly required by the Fund to provide health and
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`welfare benefits for covered employees.” Section 9.01(A)(4) of the CBA requires Nyack
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`to provide to the Fund trustees (the “Trustees”) “such documentation with respect to
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`the Employees covered by the . . . Fund as may reasonably be necessary to establish the
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`validity of claims made on the . . . Fund or the number of and identity of such
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`Employees for whom contributions were made during the term of this [CBA].” A-171.
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`The CBA also provides that (1) the Fund Trustees have “[t]he sole and exclusive
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`
`
`1 On April 29 and April 30, 2014, NYSNA and Nyack entered into a Memorandum of
`Agreement (“MOA”) stipulating that, effective June 30, 2014, Nyack would begin making
`contributions to the Fund to provide health and welfare benefits for covered employees. A-65–
`A-66, A-301–A-308. The “Scope” provision of the MOA stated that the agreement covered “all
`full-time, regular part-time and per diem registered professional nurses employed by the
`Hospital, including every person lawfully authorized by permit to practice as a registered
`professional nurse and every person employed in a position which requires a registered
`professional nurse,” excluding “supervisory, managerial and administrative employees” and
`“all other employees employed by the Hospital” (the “Bargaining Unit”). A-150.
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`2 The CBA defines regular full-time, regular part-time, and per diem employees.
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`authority . . . to determine the benefits to be provided to . . . Fund participants and to
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`make changes thereto”; (2) the Fund “shall be held and administered under the terms
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`and provisions of the existing Trust Fund Agreement and any amendments thereof”;
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`and (3) nothing in the CBA is to be construed to be inconsistent with the provisions of
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`the Trust Agreement, “except as otherwise specified in the Acknowledgment of Trust
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`Agreement provided by the . . . Fund Trustees.” A-173.
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`The Trust Agreement sets forth the rights of the Trustees and certain
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`corresponding obligations of employers who are bound by it. Nyack agreed “to be
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`bound by the [Trust Agreement], as amended from time to time.” A-232. It did so in an
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`acknowledgment of Trust Agreement [A-171] (the “Acknowledgment”), which the CBA
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`required it to sign.
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`There are no qualifications or amendments to the Trust Agreement. Article V of
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`the Trust Agreement requires Nyack (like other Employers), to “contribute to the Fund
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`the amount required by the collective bargaining agreement” between NYSNA and
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`Nyack including Employee Contributions “consistent with the employee premium
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`option adopted by [Nyack] and [NYSNA] in bargaining.” A-119. The rate of
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`“Employer Contributions” is governed by the CBA.
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`The Trust Agreement gives the Trustees of the Fund broad authority. They have
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`discretion to interpret the terms of the Trust Agreement: “The Trustees shall have
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`power to construe the provisions of this Agreement and Declaration of Trust and the
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`terms used herein and any construction adopted by the Trustees in good faith shall be
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`binding upon [NYSNA], [Nyack], and the Employees and their families and
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`dependents.” A-113. The Trustees are authorized to “do all acts, whether or not
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`expressly authorized herein, which the Trustees may deem necessary or proper for the
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`protection of the property held hereunder” or “necessary to accomplish the general
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`5
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`objective of enabling the Employees to obtain welfare benefits in the most efficient and
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`economical manner.” A-114.
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`Finally, what gives rise to this case is the Trust Agreement’s audit provision. The
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`Trust Agreement permits the Trustees to conduct an audit in connection with Employer
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`Contributions and Employee Contributions:
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`5. Report on Employer Contributions. The Employers shall make all
`reports on Employer Contributions and Employee Contributions required
`by the Trustees. The Trustees may, at such times and places as may be
`appropriate, have an audit made by independent certified public
`accountants of the payroll and wage records of any Employer in connection
`with the said Employer Contributions, Employee Contributions, and/or
`reports.
`A-121–A-122.
`
`II.
`
`The Audit Request
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`In the district court, the Fund submitted the affidavit of its Chief Operating
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`Officer, Christopher Rosetti. Rosetti averred that the Trustees were required “to assure
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`the financial integrity of the fund” and that, as an officer of the Fund, he was
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`responsible for ensuring “that every eligible participant receives” all documents,
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`reports, and other communications mandated by ERISA. A-78–A-79. “[T]his
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`responsibility extends to every person eligible to participate in the Fund – not just those
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`people who are already actively participating in the Fund or who are being reported on
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`by the contributing employers.” A-79.
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`To help the Trustees discharge their fiduciary duties, the Fund—like other
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`multiemployer fringe benefit funds—engages in payroll auditing (also known as
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`compliance auditing). Payroll auditing is used to determine whether employers are
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`making the required contributions on behalf of all eligible participants in the Fund.
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`“[M]any multiemployer benefit funds rely on employer self-reporting – meaning, the
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`employers themselves report to the funds the extent of their own contribution
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`obligations to the fund.” A-80. The Fund and its Trustees “monitor this self-reporting
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`by periodically auditing the participating employers’ payroll and wage records to make
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`sure that the employers’ reporting [is] accurate and that all contributions [are] properly
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`remitted.” Id. According to Rosetti,
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`[t]he funds need to monitor the employers’ reports and contributions
`because, e.g., an employers’ [sic] failure to report all covered employees
`may prevent funds from notifying participants and beneficiaries of their
`rights under the fund, an employer’s failure to contribute for an eligible
`employee may negatively impact the financial integrity of the fund, and
`because the fund’s and the employers’ interests are not completely aligned
`(i.e., it would be advantageous for an employer to underreport the number
`of its covered employees because that would reduce the amount of
`contributions that the employer owes to the fund).
`
`A-80.
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` Every year, the Fund’s accounting department selects six of the numerous
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`employers that employ Fund beneficiaries for a payroll audit. The auditors perform the
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`audit according to “agreed-upon procedures” (“AUP”), by which the Fund dictates the
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`scope of the audit and then works with the auditors to determine the sample size and
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`the procedures. A-79–A-80.
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`On May 12, 2016, the Fund sent a letter to Nyack notifying it that the Fund’s
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`auditors intended to review Nyack’s payroll and related data. The audit would be the
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`Fund’s first audit of Nyack, which had joined the Fund in 2014. On May 13, 2016, the
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`Fund emailed Nyack a set of AUPs with a request list, which asked for, among other
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`items, “the May 2015 payroll register(s) for [Nyack] (should be inclusive of all
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`employees, not just the NYSNA group),” “a detail listing of all employees hired during
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`the year ended December 31, 2015 (should be inclusive of all employees, not just the
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`NYSNA group),” “a detail listing of all employees terminated during the year ended
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`December 31, 2015 (should be inclusive of all employees, not just the NYSNA group),”
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`7
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`and personnel records for a sample of employees that included their job classification.
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`A-241.
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`On May 23, 2016, Nyack responded with the list of all active members in the
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`collective bargaining unit covered by the CBA with NYSNA but expressed reservations
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`about providing documents concerning employees who were not members of the
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`collective bargaining unit. The Fund replied that it needed the records of all employees
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`“in order to independently verify who the [NYSNA]-collectively bargained employees
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`are.” A-255. The Fund stated that “[o]therwise it is impossible for [the auditors to]
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`independently verify what has been represented” and that the request was “[s]tandard
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`for any audit performed by an independent audit firm.” Id. The Fund invoked its
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`authority under Article V of the Trust Agreement. Id. In subsequent emails, the Fund’s
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`Chief Operating Officer stated that “the payroll information requested and reviewed by
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`the auditors is not shared by them with us, or anyone else” and asked whether Nyack
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`would accept a confidentiality agreement from the auditors. A-260.
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`In August 2016, Nyack and the Fund’s auditor signed an engagement letter,
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`which specified “agreed-upon procedures” for the audit and stated: “This engagement
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`is solely to assist the Board of Trustees . . . of the Fund in evaluating the accuracy and
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`completeness of [Nyack’s] monthly contribution reports, including the extent of
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`compliance with the Fund contribution requirements in the collective bargaining
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`agreement between [Nyack] and [NYSNA].” A-265.
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`III. The Dispute
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`By email dated September 9, 2016, the auditor requested that Nyack provide:
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`(1) a list of employees who were hired in 2015; (2) a list of employees who were
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`terminated during 2015; (3) a job classification code for each department; (4) the
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`monthly payroll registers that would be selected for the sample; and (5) the employee
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`personnel files that would be selected for the sample (the “September 9, 2016 Request”).
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`By follow up email, the auditor asked whether a signed confidentiality agreement
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`would permit Nyack to provide the records for all employees. In response, Nyack
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`advised the auditor that it would “supply the payroll information for only the
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`employees covered under the NYSNA cba.” A-297.
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`In response, counsel for the Fund sent a letter to Nyack demanding that the
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`auditor be permitted to examine all of the necessary documents. Nyack replied that it
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`would allow the auditor to look at only the payroll records of Nyack employees who
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`were RNs and participants in the Fund.
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`IV. The Litigation
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`The Fund commenced this action against Nyack on March 15, 2017, alleging that
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`Nyack’s failure to comply with Article V of the Trust Agreement constituted a breach of
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`contract and a violation of ERISA and the Labor Management Relations Act of 1947, 29
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`U.S.C. § 141, et seq., and seeking an order requiring Nyack to produce “all books and
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`records” necessary for it to perform the audit examination pursuant to the Trust
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`Agreement and ERISA, as well as monetary relief. A-29. The Fund alleged that,
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`without the requested payroll records, (1) it would not be able to determine the full
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`amount of unpaid contributions owed to the Fund by Nyack; (2) the employee-
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`beneficiaries of the Fund would suffer injury because the Fund would be required to
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`deny welfare benefits to employee-beneficiaries for whom required contributions had
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`not been made; and (3) the Fund would be required to provide to employees benefits
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`provided for under the Trust Agreement even if Nyack failed to make the required
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`contributions, thereby reducing the corpus of monies administered by the Fund and
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`endangering the rights of the employee-beneficiaries in the future. The Fund
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`additionally alleged that, in the event Nyack was found delinquent in its contributions,
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`the Fund would be entitled to: “(a) the contributions found delinquent for the period
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`January 1, 2015 through December 31, 2015; (b) liquidated damages of twenty percent
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`(20%) on all delinquent contributions; (c) interest at the rate of one and one-half percent
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`(1.5%) per month; (d) audit costs; (e) reasonable attorney’s fees, costs and expenses; (f)
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`along with such other legal and equitable relief as the Court deems appropriate.” A-26.
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`Nyack moved to dismiss, arguing that the Fund’s audit request was overbroad
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`and impermissible under the CBA. By opinion and order of April 30, 2018, the district
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`court denied the motion without prejudice. It held that Nyack had contractual
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`obligations both under the CBA and under the Trust Agreement, that the terms of the
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`Trust Agreement governed over those of the CBA where the two were inconsistent, that
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`the Trustee’s good-faith construction of the Trust Agreement was entitled to deference,
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`and that Nyack was “subject to audit at the Fund’s request, provided the Fund has
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`construed its authority in good faith.” A-37. The court then, however, stated that it was
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`“perplexed” as to the extent of the request “[i]n view of the scope provision of the 2013
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`CBA” and determined that “on the current record, [it could] not conclude the requested
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`audit [was] broader in scope than necessary to achieve its objective.” A-38 (internal
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`quotation marks and citation omitted). The district court did not address whether the
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`documents requested were within the terms of the Trust Agreement.
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`The parties then cross-moved for summary judgment. The Fund argued that,
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`under the terms of the Trust Agreement, its auditors were entitled to look at the payroll
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`records of all of Nyack’s employees. Nyack argued that the Fund was entitled to an
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`audit only of the payroll records of RNs who were part of the collective bargaining unit.
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`The district court granted in part and denied in part both parties’ motions for
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`summary judgment. N.Y. State Nurses Ass’n Benefits Fund v. Nyack Hosp., 2019 WL
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`4735355 (S.D.N.Y. Sept. 27, 2019). The court observed that “when authorized
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`contractually or under common law, the right to audit is not unlimited—indeed,
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`trustees may not abuse that right.” Id. at *4. It proceeded to hold that the Fund was not
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`entitled to records beyond those of persons whom Nyack identified to be RNs because
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`the Fund had “not presented evidence that its proposed audit of all of Nyack’s
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`employees, as opposed to just Nyack’s registered nurses, would further its two alleged
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`purposes: (i) to determine whether Nyack was accurately reporting the duties and
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`status of its employees, and thereby verify that all required contributions are being
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`made on behalf of covered employees; and (ii) to identify all plan participants and
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`beneficiaries and make them aware of their status and rights under the plan.” Id. at *6.
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`The district court concluded that there is no evidence that (1) “an audit of all of Nyack’s
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`employees’ payroll records, as opposed to just registered nurses, would lead to the
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`discovery of unfunded liabilities”; and (2) “the payroll records of non-registered nurses
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`would allow the Fund to identify additional plan participants.” Id. At the same time, it
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`held that the records of all RNs were required to determine whether Nyack was
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`accurately reporting the membership of the class defined by the Fund’s terms because
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`the CBA contained several exceptions to the types of covered RNs. The court did not
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`identify any evidence presented by Nyack that the audit request represented an effort
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`by Fund Trustees to expand Fund coverage beyond the class defined in the Fund’s
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`terms, that it was an effort to acquire information about the employer to advance union
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`goals, that executing the audit would result in a waste of Fund assets, or that the audit
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`request was unrelated to legitimate Fund goals.
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`DISCUSSION
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`On appeal, both parties seek reversal in part of the district court’s decision. The
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`Fund maintains that the terms of the Trust Agreement entitle it to the records set forth
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`in the September 9, 2016 Request, including the payroll registers of all of Nyack’s
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`employees, plus more detailed samples of individual employee payroll records. Nyack
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`argues that the district court erred and that the Fund is entitled to audit the payroll
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`records only of those employees who are members of the collective bargaining unit. In
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`other words, the Fund argues that the audit is now too narrow, while Nyack argues that
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`it is still too broad. We agree with the Fund.
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`I.
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`Standard of Review
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`The Court reviews a district court’s grant or denial of summary judgment de novo
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`“to determine whether genuine issues of material fact exist requiring a trial.” Morales v.
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`Quintel Ent., Inc., 249 F.3d 115, 121 (2d Cir. 2001) (citation omitted); see also Chandok v.
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`Klessig, 632 F.3d 803, 812 (2d Cir. 2011). Summary judgment is appropriate if there are
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`no genuine issues of material fact and the moving party is entitled to judgment as a
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`matter of law. Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986).
`
`Terms of a collective bargaining agreement are reviewed de novo. Marcic v. Reinauer
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`Transp. Cos., 397 F.3d 120, 124 (2d Cir. 2005). “The interpretation of collective
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`bargaining agreements is governed by federal law; however, traditional contract
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`interpretation rules are applied if they are consistent with federal labor policies.”
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`Plumbers & Steamfitters Loc. No. 150 Pension Fund v. Vertex Constr. Co., 932 F.2d 1443,
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`1448 (11th Cir. 1991) (citing Int’l Union, United Auto., Aerospace, & Agric. Implement
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`Workers of Am. v. Yard-Man, Inc., 716 F.2d 1476, 1479 (6th Cir. 1983)).
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`II.
`
`The Supreme Court’s Decision in Central States
`
`The starting point for analyzing the scope of an ERISA-covered plan’s audit
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`authority is the Supreme Court’s decision in Central States, Southeast and Southwest Areas
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`Pension Fund v. Central Transport, Inc., 472 U.S. 559 (1985) (“Central States”). In Central
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`States, two multiemployer benefit plans providing health, welfare, and pension benefits
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`to employees performing work covered by collective bargaining agreements sought to
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`audit the records of certain employers who were parties to collective bargaining
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`agreements requiring them to make contributions to the plans. The benefit plans
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`argued that (1) because they relied principally on employer self-reporting to determine
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`the extent of an employer’s liability, they police “this self-reporting system by
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`conducting random audits of the records of participating employers”; and (2) the audit
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`was necessary “independently to determine the membership of the class entitled to
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`participate in the plans, and thus to verify that Central Transport was making all
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`required contributions.” Id. at 562–63. The employer argued that, because 60% of its
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`employees were not participants in either of the plans, the plans had no right to
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`examine any records of noncovered employees. Id. at 563.
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`The Court started its analysis from the language of the trust agreement, which
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`authorized the trustees to “do all acts, whether or not expressly authorized . . ., which
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`[they] may deem necessary or proper for the protection of the property held [under the
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`trust agreement].” Id. at 565 (alterations in original). Further, the trust agreement
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`stipulated that: “The Trustees may, by their representatives, examine the pertinent
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`records of each Employer at the Employer’s place of business whenever such
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`examination is deemed necessary or advisable by the Trustees in connection with the
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`proper administration of the Trust.” Id. at 566. The Court concluded that “the trustees’
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`right to conduct the audit in question would seem clear” under the terms of the trust
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`agreement. Id. at 568.
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`The Central States Court also concluded that the trustees’ interpretation of the
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`trust agreement, insofar as it permitted them to review records of persons who were not
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`participants, was “entirely reasonable in light of ERISA’s policies.” Id. at 569. “ERISA
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`clearly assumes that trustees will act to ensure that a plan receives all funds to which it
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`is entitled, so that those funds can be used on behalf of participants and beneficiaries,
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`and that trustees will take steps to identify all participants and beneficiaries, so that the
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`trustees can make them aware of their status and rights under the trust’s terms.” Id. at
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`571–72. The concerns offered by the plan “to justify its audit program” were consistent
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`with ERISA: “Both the concern for fully informing participants of their rights and status
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`under a plan and the concern for assuring the financial integrity of the plans by
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`determining the class of potential benefit claimants and holding employers to the full
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`and prompt fulfillment of their contribution obligations are proper and weighty within
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`the framework of ERISA.” Id. at 574.3
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`The Court did not stop there, however. It also stated that “trust documents
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`cannot excuse trustees from their duties under ERISA,” id. at 568, and it made clear that
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`a court should not enforce an audit request when the implementation of such a request
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`would breach the trustees’ duties of loyalty or prudence, id. at 571 n.12. It noted that an
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`audit request “would be illegitimate under the standard of loyalty if it were actually an
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`effort by plan trustees to expand plan coverage beyond the class defined in the plans’
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`terms or to acquire information about the employers to advance union goals” and that
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`the audit might be “imprudent if it were clearly wasteful of plan assets or unrelated to
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`legitimate plan concerns.” Id. But the employer in Central States had “submitted no
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`evidence that [the] audit program’s actual goal was to expand the trust’s coverage
`
`beyond that provided in the applicable collective-bargaining agreements or to acquire
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`information for union goals; nor did it submit any evidence that the audits were
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`unjustifiably costly.” Id. In the absence of such evidence, “whether the auditing power
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`claimed by Central States is consistent with ERISA must be analyzed in terms of the
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`3 The Court observed that ERISA requires benefit plans “to furnish all participants with various
`documents informing them of their rights and obligations under the plan, a task that would
`certainly include the duty of determining who is in fact a plan participant.” Id. at 572 (citation
`omitted); see also id. at 567 (“Moreover, an employer has an incentive to underreport the number
`of employees covered, because such underreporting would reduce his liability to the plans.”)
`The Court also noted that “[t]he provisions of ERISA make clear that a benefit plan trustee
`is . . . subject to these responsibilities, not only as a result of the general fiduciary standards of
`loyalty and care, borrowed as they are from the common law, but also as a result of more
`specific trustee duties itemized in the Act.” Id. at 572.
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`goal upon which Central States has rested its audit, that of policing [the employer’s
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`determination of eligible plan participants covered by the CBA to verify that the
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`employer was contributing all required amounts on behalf of all covered employees].”
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`Id. As long as the plan’s goal was consistent with ERISA, the Court looked no further to
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`determine whether it was imprudent or a breach of the duty of loyalty.
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`III. Application of the Central States Framework
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`Central States thus requires this Court to analyze first the language of the Trust
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`Agreement to which both the Fund and Nyack are bound in order to determine
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`whether the audit is within the scope of what is permitted under the Trust Agreement.
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`Then, if the audit falls within the four corners of what is permitted, we turn to whether
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`the party resisting the audit has offered evidence that the audit request was actually an
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`effort by the Trustees to expand Fund coverage beyond the class defined in the Fund’s
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`terms or to acquire information about the employers to advance union goals, or
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`whether the audit itself was clearly wasteful of Fund assets or unrelated to legitimate
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`Fund concerns. Central States did not charge the district court with the responsibility to
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`comb through each document requested as part of a contractually authorized audit and
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`to determine whether that document was strictly necessary for the auditors to do their
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`jobs.
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`1. Whether the Audit Was Contractually Authorized
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`Under the Central States framework, the analysis here is straightforward, and
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`most of it is undisputed. To begin with, the Trust Agreement (by which Nyack agreed
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`to be bound) authorized the Trustees “at such times and places as may be appropriate,
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`[to] have an audit made by independent certified public accountants of the payroll and
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`wage records of any Employer in connection with the said Employer Contributions,
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`Employee Contributions, and/or reports.” A-122. There is no dispute that Nyack is an
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`“Employer” within the meaning of the Trust Agreement. There also is no dispute that
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`the audit was to be conducted by independent certified public accountants. Nor is there
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`any dispute that the proposed audit would have been “in connection with the said
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`Employer Contributions, Employee Contributions, and/or reports.” See Dkt. No. 60
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`¶¶ 7, 16, 28, 29. The “in connection with” language is read most naturally to refer to the
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`objective of the audit and not to qualify the payroll and wage records. Here, it is not
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`disputed that the objective of the audit was to determine that Nyack was making
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`contributions for all of the employees for whom contributions were required.
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`The only disputed legal question with respect to the Trust Agreement is whether
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`the materials requested fell within the meaning of “the payroll and wage records of any
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`Employer” as set forth in the Trust Agreement. The Court must assume the Trust
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`Agreement’s choice of words was advised. The language of the Trust Agreement is
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`phrased in broad terms, without any words of limitation. In describing the categories of
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`documents to which the Trustees are entitled, it uses the phrase “the payroll and wage
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`records” of the Employer, and not just “payroll and wage records” of the Employer; nor
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`does the language of the Trust Agreement limit the scope of the audit authority to some
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`subset of the payroll and wage records of the Employer. It very well might have done
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`so had the parties intended to give the Employer the authority to determine what
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`payroll and wage records were necessary, or had they intended to limit the documents
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`to which the Trustees were entitled in connection with an audit of the records of RNs.
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`The Trust Agreement elsewhere defines “Employees” as “all persons covered by a
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`collective bargaining agreement between an Employer and the [NYSNA],” i.e., the RNs
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`in the case of Nyack. A-102. The parties could have chosen to limit the documents to
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`which the Trustees were entitled to “the payroll and wage records of Employees.” They
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`chose not to do so, and it is not within the p