Grandson v. Western Lake Superior Piping Industry Pension Plan et al
Filing
78
ORDER granting 53 Plaintiff's Motion for Summary Judgment; denying 59 Defendants' Motion for Summary Judgment. See order for additional details. (Written Opinion) Signed by Judge Laura M. Provinzino on 1/27/2025. (TJC)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
JAMES GRANDSON,
Case No. 23-cv-214 (LMP/LIB)
Plaintiff,
v.
ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY
JUDGMENT AND DENYING
DEFENDANTS’ MOTION FOR
SUMMARY JUDGMENT
WESTERN LAKE SUPERIOR PIPING
INDUSTRY PENSION PLAN; BOARD
OF TRUSTEES OF THE WESTERN
LAKE SUPERIOR PIPING INDUSTRY
PENSION PLAN,
Defendants.
Denise Yegge Tataryn, Nolan Thompson Leighton & Tataryn PLC, Hopkins, MN, for
Plaintiff.
Ernest F. Peake & Stacey L. Drentlaw, Taft Stettinius & Hollister LLP, Minneapolis,
MN for Defendants.
Plaintiff James Grandson (“Grandson”) and Defendants Western Lake Superior
Piping Industry Pension Plan (the “Pension Plan”) and Board of Trustees of the Western
Lake Superior Piping Industry Pension Plan (the “Trustees”) (collectively, “Defendants”)
each move for summary judgment on Grandson’s claim for benefits due under the
Employee Retirement Income Security Act (“ERISA”) and Grandson’s breach-offiduciary-duty claim under ERISA. 1
For the following reasons, the Court grants
Grandson’s motion and denies Defendants’ motion.
1
Grandson brings a third cause of action for attorneys’ fees and costs under ERISA.
1
FACTUAL BACKGROUND 2
Grandson is a participant in the Pension Plan, which is a defined benefit pension
plan governed by ERISA, ECF No. 66 at 2–4, and administered by the Trustees, id. at 78.
The Pension Plan provides for retirement benefits at the “normal retirement age” of 62. Id.
at 88. If an employee participating in the Pension Plan retires after the age of 62, the
employee may be eligible for a “late retirement benefit” that is equivalent to an actuarial
increase from the normal retirement benefit. Id. at 100, 154. Section 3.06(c) 3 of the
Pension Plan provides an exception to this rule, however: “[N]o actuarial increase will be
provided for months in which a Participant engages in Disqualifying Employment if the
provisions of 29 C.F.R. § 2530.203-3 are satisfied.” 4 Id. at 154.
At all times relevant to this action, the Pension Plan defined “Disqualifying
Employment” as:
Forty (40) or more hours of employment in the same industry covered by the
plan, in [the] same geographic area covered by the plan at the time that the
participant commenced benefits, and in the same trade or craft that the
participant was employed in at any time under the plan. Employment
includes employment with a contributing employer, a non-contributing
employer, and self-employment.
The factual background contains only the undisputed facts in the summaryjudgment record.
2
The exact citation of this section varies in different versions of the Pension Plan, but
the language of this section has remained materially the same. See ECF No. 66 at 100
(same plan language, but listed as Section 4.04(c)). Because this Pension Plan provision
is cited as “Section 3.06(c)” in the correspondence between the parties, the Court will cite
to this provision as such.
3
As explained below, 29 C.F.R. § 2530.203-3 authorizes a pension plan to suspend
or forfeit a plan participant’s pension benefits after the attainment of normal retirement age
under certain circumstances.
4
2
Id. at 132.
The Pension Plan was summarized in Summary Plan Descriptions (“SPDs”) issued
to Grandson in 2015 and 2021. Id. at 218–35, 236–56. Both the 2015 and 2021 SPDs
explained how late retirement benefits would be calculated. The 2015 SPD provides:
If you defer your benefits past your normal retirement date, your monthly
benefit will be increased relative to the normal retirement benefit because the
benefit is expected to be paid out over a shorter period of time. Your monthly
benefit is the actuarial equivalent of the normal retirement benefit.
Id. at 225. The 2021 SPD is largely identical, but it adds that the “monthly benefit is the
greater of (a) your accrued benefit as of your late retirement date or (b) the actuarial
equivalent of the normal retirement benefit.” Id. at 245. Both the 2015 and 2021 SPDs
also contained information about Disqualifying Employment under a heading titled
“WHAT HAPPENS IF I RESUME WORKING AFTER I RETIRE?” Id. at 227, 246. On
this point, the 2021 SPD reflected a 2019 amendment 5 to the definition of “Disqualifying
Employment,” stating, “Disqualifying employment is work (including self-employment)
for at least 40 hours within a month in the [] industry, trade or craft, and geographical region
that was covered by the Plan at the time you commenced your benefits.” Id. at 246.
On November 1, 2019, shortly before Grandson turned 62, the third-party
administrator of the Pension Plan sent a “Suspension of Retirement Benefits Notice” (the
Prior to May 1, 2019, the Pension Plan defined “Disqualifying Employment” as
“Forty (40) hours or more per month of work in the industry for any Employer or, work in
the industry within the jurisdiction of the Union for an employer in the same or related
business as any Employer, or self-employment in the industry within the jurisdiction of the
Union in the same or related business as any Employer.” ECF No. 66 at 83–84.
5
3
“Notice”) to Grandson. Id. at 2–4; see ECF No. 66-1 at 32–33. The Notice explained that
“if a participant is employed by a contributing employer after age 62, payment of pension
benefits is delayed until the participant’s actual retirement date.” ECF No. 66 at 3.
Grandson elected to continue working for a “contributing employer” after he turned 62—
indeed, his very same employer—and, accordingly, did not receive payment of his
retirement benefits. See ECF No. 66-1 at 41.
Fast forward to mid-2021, when Grandson was contemplating retirement and began
to inquire about how his pension benefit would be calculated. ECF No. 66 at 5. Grandson
asserted that he was entitled to a late retirement benefit equivalent to an actuarial increase
from his normal retirement benefit. Id. at 6. In November 2021, the Trustees invited
Grandson to submit a letter detailing his argument, id. at 5, which Grandson submitted in
January 2022, id. at 6. The Trustees considered Grandson’s letter at their February 2022
meeting and, after receiving advice from Plan Counsel about the interpretation of the
Pension Plan, ultimately concluded that Section 3.06(c) of the Pension Plan did not permit
Grandson to receive an actuarial increase in benefits because he had been engaged in
“Disqualifying Employment.” Id. at 19–21, 64–65. The Trustees authorized Plan Counsel
to send Grandson a letter memorializing their conclusions, which was sent to Grandson on
February 10, 2022.
Id. at 19–21.
That letter states that the Trustees “considered
[Grandson’s] correspondence an appeal for purposes of 29 C.F.R. § 2560.503-1” and that
the February 10, 2022 letter was a “final determination on [Grandson’s] appeal.” Id. at 19.
The letter further advised that Grandson was required to “file a lawsuit in Federal Court
4
within one year of the date of” the letter if he wanted to “contest the final determination.”
Id.
In August 2022, Grandson, unrepresented, sent a detailed, eight-page letter to the
Trustees requesting reconsideration of their decision.
Id. at 23–30.
The Trustees
considered Grandson’s letter at their September 2022 meeting, at which Plan Counsel
recommended allowing Grandson to submit a “final appeal and complaint regarding the
benefit calculation.” Id. at 69. The Trustees approved this recommendation, and Plan
Counsel sent a letter to Grandson on September 6, 2022, allowing Grandson to submit
additional arguments and evidence to support his claim, but on two conditions:
(1) Grandson would not file suit until the Trustees reconsidered his request, and (2) the
Trustees’ determination on reconsideration would be considered a final determination of
all arguments that were or could have been raised. Id. at 32. On September 13, 2022,
Grandson rejected the Trustees’ conditions on his reconsideration request, id. at 35, and
Plan Counsel responded that the Trustees would consider Grandson’s reconsideration
request on the arguments and evidence already submitted, id. at 36.
At their November 2022 meeting, the Trustees again considered Grandson’s claim
that he was entitled to an actuarial increase in benefits. Id. at 74–75. In advance of the
meeting, Plan Counsel prepared a memorandum analyzing Grandson’s arguments and
ultimately concluded that Grandson was not eligible for an actuarial increase in benefits
because he engaged in “Disqualifying Employment” under Section 3.06(c) of the Pension
Plan. Id. at 42–43. Plan Counsel discussed the memorandum with the Trustees at the
November 2022 meeting, and the Trustees adopted Plan Counsel’s recommendation not to
5
award Grandson an actuarial increase in benefits. Id. at 74–75. Plan Counsel sent
Grandson a letter on November 9, 2022, explaining the denial and stating that it was the
Trustees’ “final determination.” Id. at 44–46. The November 9, 2022 letter concluded:
“Your administrative remedies are now exhausted. . . . If you wish to contest the final
determination, you must file a lawsuit in Federal Court on or before February 10, 2023.”
Id. at 46. To date, Grandson has not retired and has not received any retirement benefits.
See ECF No. 66 at 55.
Grandson filed this action on January 27, 2023, bringing claims for benefits due and
breach of fiduciary duty under ERISA. ECF No. 1. Defendants moved to dismiss
Grandson’s complaint on the grounds that (1) Grandson had failed to timely exhaust
administrative remedies, (2) the Pension Plan unambiguously precluded Grandson from
receiving an actuarial increase in benefits, and (3) Grandson’s breach-of-fiduciary-duty
claim sought the same relief as his benefits-due claim. See ECF No. 13. United States
District Judge Jerry W. Blackwell rejected the first two arguments, but accepted the third,
granting the motion to dismiss Grandson’s claim for breach of fiduciary duty. See ECF
No. 22. Grandson later repleaded the claim for breach of fiduciary duty in his Amended
Complaint. See ECF No. 41. The parties now each move for summary judgment on
Grandson’s benefits-due and breach-of-fiduciary-duty claims. See ECF Nos. 53, 59.
ANALYSIS
Summary judgment is proper only if “there is no genuine issue as to any material
fact” and “the moving party is entitled to judgment as a matter of law.” Riedl v. Gen. Am.
Life Ins., 248 F.3d 753, 756 (8th Cir. 2001) (citation omitted) (internal quotation marks
6
omitted). At this procedural juncture, this Court does “not weigh the evidence, make
credibility determinations, or attempt to discern the truth of any factual issue.” Avenoso v.
Reliance Standard Life Ins. Co., 19 F.4th 1020, 1024 (8th Cir. 2021) (citation omitted)
(internal quotation marks omitted). Additionally, the Court must view the facts in the light
most favorable to the non-moving party. See Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 587 (1986).
I.
Grandson’s Benefits-Due Claim 6
Count I of Grandson’s Amended Complaint seeks pension benefits due under 29
U.S.C § 1132(a)(1)(B). Grandson moves for summary judgment on this claim, arguing
that Defendants erroneously denied him an actuarial increase in benefits, contrary to the
plain language of the Pension Plan. ECF No. 55 at 15–25. Defendants also seek summary
judgment on this claim, arguing that Grandson failed to exhaust administrative remedies
and that the Trustees’ interpretation of the Pension Plan was reasonable. ECF No. 61 at
18–30.
Because Grandson exhausted his administrative remedies, and because
Defendants’ denial of benefits was an abuse of discretion, the Court grants Grandson’s
motion, and denies Defendant’s motion, on Count I.
A.
Exhaustion of Administrative Remedies
As a threshold matter, “exhaustion of contractual remedies is required in the context
of a denial of benefits action under ERISA when there is available to a claimant a
Because the parties’ response briefs largely mirror the parties’ own summary
judgment motions and respond to the same issues, the Court addresses the two motions for
summary judgment together.
6
7
contractual review procedure.” Wert v. Liberty Life Assurance Co. of Boston, Inc., 447 F.3d
1060, 1063 (8th Cir. 2006). Defendants argue that Grandson failed to timely exhaust his
administrative remedies pursuant to Section 6.07 of the Pension Plan, which provides that
a request to review “the determination suspending [a participant’s] benefits” must be filed
within 60 days of the Notice (in Grandson’s case, January 1, 2020). ECF No. 61 at 18–20.
The problem with Defendants’ argument is that Grandson is not challenging “the
determination suspending [his] benefits”; rather, Grandson is challenging the computation
of benefits that results after his benefits were suspended. Grandson does not dispute that
the Trustees could suspend his retirement benefits while he continued to work.
Accordingly, there would have been no reason for Grandson to raise a challenge to his
retirement benefits when he reached the normal retirement age.
Having suspended
Grandson’s benefits, however, the Trustees are faced with a different dispute: how those
suspended benefits should be calculated. The 60-day deadline in Section 6.07 therefore
does not apply to Grandson’s claim that he is owed an actuarial increase in benefits.
As to that claim, Grandson has satisfied the administrative exhaustion requirement
in spades. Grandson communicated his claim to the Trustees in multiple letters, which the
Trustees themselves construed as an administrative appeal “for purposes of 29 C.F.R.
§ 2560.503-1.” ECF No. 66 at 19. And after the Trustees denied Grandson’s request for
consideration in November 2022, the Trustees explained to Grandson, “Your administrative
remedies are now exhausted. . . . If you wish to contest the final determination, you must
file a lawsuit in Federal Court on or before February 10, 2023.” Id. at 46. Evidently,
Defendants themselves considered Grandson to be taking advantage of his administrative
8
remedies and to have exhausted those remedies as of November 9, 2022. The Court rejects
Defendants’ present “post hoc rationales” to the contrary. See King v. Hartford Life &
Accident Ins. Co., 414 F.3d 994, 999 (8th Cir. 2005) (citation omitted) (internal quotation
marks omitted).
Moreover, the important objectives of exhaustion were furthered by Grandson’s
appeal before the Trustees, as the Trustees were provided “an opportunity to correct errors,”
“assembl[ed] a fact record” for this Court to review, and engaged in “a non-adversarial
dispute resolution process.” Wert, 447 F.3d at 1066 (citation omitted) (internal quotation
marks omitted). To his credit, on his own, Grandson did everything required of him under
the Plan and the law to seek an administrative resolution of his claim. And all parties
behaved as if he had. This cements the conclusion that Grandson properly exhausted his
administrative remedies.
B.
The Trustees’ Determination Was an Abuse of Discretion
The parties are largely in agreement on the relevant facts applicable to Grandson’s
benefits-due claim. And the parties agree that ERISA’s abuse-of-discretion standard
applies to the Trustees’ determination that Grandson is ineligible for an actuarial increase
in benefits. ECF No. 55 at 15–16; ECF No. 61 at 20–21. Under that standard of review,
“the administrator’s decision need be only reasonable,” meaning that it must be supported
by substantial evidence, and that decision will be reversed only if it was arbitrary and
capricious. Alexander v. Trane Co., 453 F.3d 1027, 1031 (8th Cir. 2006) (citations omitted).
To determine whether the Trustees’ decision was an abuse of discretion, courts in
this Circuit examine five factors: (1) whether the administrator’s interpretation is contrary
9
to the clear language of the plan; (2) whether the interpretation conflicts with the
substantive or procedural requirements of ERISA; (3) whether the interpretation renders
any language in the plan meaningless or internally inconsistent; (4) whether the
interpretation is consistent with the goals of the plan; and (5) whether the administrator has
consistently followed the interpretation. See Finley v. Special Agents Mut. Benefit Ass’n,
Inc., 957 F.2d 617, 621 (8th Cir. 1992). While these non-exhaustive factors inform the
Court’s analysis, “the ultimate question remains whether the plan interpretation is
reasonable.” 7 Peterson v. UnitedHealth Grp. Inc., 913 F.3d 769, 776 (8th Cir. 2019).
1.
Interpretation Contrary to Pension Plan Language
The parties’ dispute boils down to the interpretation of Section 3.06(c) of the
Pension Plan, which provides that “no actuarial increase will be provided for months in
which a Participant engages in Disqualifying Employment if the provisions of 29 C.F.R
§ 2530.203-3 are satisfied.” The parties hotly dispute whether Grandson was engaged in
“Disqualifying Employment,” as that phrase is interpreted in the Pension Plan in effect at
the time Grandson reached the normal retirement age:
Forty (40) or more hours of employment in the same industry
covered by the plan, in same geographic area covered by the
plan at the time that the participant commenced benefits, and
in the same trade or craft that the participant was employed in
at any time under the plan. Employment includes employment
Grandson notes that another factor this Court may consider is whether there exists
a conflict of interest from the defendant both funding the plan and deciding the claim. ECF
No. 55 at 16–17. But Grandson neither alleges nor argues that Defendants have both
funded the Pension Plan and decided the claim; in fact, it appears that Defendants do not
fund the Pension Plan. ECF No. 66 at 95, 160. The Court therefore does not consider the
conflict-of-interest factor.
7
10
with a contributing employer, a non-contributing employer,
and self-employment.
ECF No. 66 at 132. Grandson does not dispute that he was employed full-time in
the same industry covered by the Pension Plan, that he worked in the same geographic area
covered by the Pension Plan, or that he worked in the same trade or craft that he was
employed in under the Pension Plan. Rather, he argues that Disqualifying Employment
can only begin after “the participant commenced benefits,” and because it is undisputed
that he never commenced benefits while working after normal retirement age, he could not
have engaged in “Disqualifying Employment” under the Pension Plan in effect at the time
he reached the normal retirement age. ECF No. 55 at 19. Defendants respond that
Grandson’s interpretation of “Disqualifying Employment” is unreasonable because
individuals who have commenced benefits could never be eligible for a late retirement
increase, rendering Section 3.06(c) superfluous. ECF No. 61 at 20.
Grandson’s interpretation accords with the plain language of the Pension Plan’s
definition of “Disqualifying Employment” in effect at the time Grandson reached the
normal retirement age, which explicitly contemplates that an employee engages in
Disqualifying Employment only after “the participant commenced benefits.” ECF No. 66
at 132. Indeed, even Plan Counsel recognized that Grandson had identified a “glitch” in
the applicable definition of Disqualifying Employment. ECF No. 66 at 43. Although Plan
Counsel waved away the significance of that “glitch,” Grandson is entitled to have the Plan
language applicable to him enforced, glitches and all, because “[e]ven under the deferential
abuse-of-discretion standard, a plan administrator cannot contradict the plain language of
11
an ERISA plan to deny benefits.” Knowlton v. Anheuser-Busch Cos. Pension Plan, 849
F.3d 422, 430 (8th Cir. 2017); see also Lickteig v. Bus. Men’s Assurance Co. of Am., 61
F.3d 579, 585 (8th Cir. 1995) (explaining that in applying the Finley factors, “significant
weight should be given to” a plan administrator’s “misinterpretation of unambiguous
language in a plan”). 8
Although the Pension Plan’s language forms the core of the benefits-due analysis,
the Court may also consult the SPDs to glean further insight into a participant’s rights and
obligations under the Pension Plan. See Bowers v. Life Ins. Co. of N. Am., 21 F. Supp. 3d
993, 1000 (D. Minn. 2014). Here, the 2021 SPD states that a late retirement benefit “is the
greater of (a) [the participant’s] accrued benefit as of [the participant’s] late retirement date
or (b) the actuarial equivalent of the normal retirement benefit,” without any qualification
as to the consequences of engaging in Disqualifying Employment. ECF No. 66 at 245.
And, to put a finer point on it, the portion of the SPD explaining the amended definition of
“Disqualifying Employment” further supports Grandson’s interpretation because it
clarifies that such employment is evaluated by reference to the position the participant held
“at the time [the participant] commenced [his] benefits.” Id. at 246 (emphasis added).
Defendants’ argument that Grandson’s interpretation of “Disqualifying
Employment” renders the Pension Plan’s language meaningless and superfluous is
addressed within that respective Finley factor.
8
12
Because Grandson indisputably never commenced benefits during his period of
alleged Disqualifying Employment, 9 he cannot be classified as engaging in “Disqualifying
Employment” under the Pension Plan. Accordingly, to the extent the Trustees denied
Grandson an actuarial increase in benefits because they concluded that he was engaged in
“Disqualifying Employment” (as that term is defined in the Pension Plan), the Trustees
abused their discretion. See Knowlton, 849 F.3d at 430.
The matter does not end there, however, for Defendants advance an alternative
argument that Section 3.06(c) incorporates by reference the definition of “disqualifying
employment” in 29 C.F.R § 2530.203-3. ECF No. 61 at 25–26. That regulation provides
that a plan need not provide an actuarial increase in benefits to compensate for the period
after normal retirement age that payment of the benefits is deferred because the recipient
is engaged in “section 203(a)(3)(B) service.” 29 C.F.R § 2530.203-3(b). In turn, “section
203(a)(3)(B) service” in this context is defined as “the employment of an employee
subsequent to the time the payment of benefits commenced or would have commenced if
the employee had not remained in or returned to employment.” 29 C.F.R § 2530.2033(c)(2).
At oral argument, Defendants’ counsel suggested that Grandson had commenced
benefits by the very act of continuing to work past the age of 62. Whatever the merits of
that argument, it is doubly forfeited, first because it was raised for the first time at oral
argument, see Anderson v. Rugged Races LLC, 496 F. Supp. 3d 1270, 1285 n.11 (D. Minn.
2020), and second because it was not the rationale the Trustees used in denying Grandson’s
claim for benefits, King, 414 F.3d at 999 (rejecting post hoc rationales for administrator
decisions). In fact, the Trustees took the opposite position, writing to Grandson in
November 2022 that he “ha[d] not commenced benefits.” ECF No. 66 at 44 (emphasis
added). There are simply no facts in the record to support the assertion that Grandson
began receiving retirement benefits.
9
13
Although Grandson was plainly not engaged in “Disqualifying Employment” as
defined by the Pension Plan, he was plainly engaged in “section 203(a)(3)(B) service”
because he was employed “subsequent to the time the payment of benefits . . . would have
commenced if the employee had not remained in or returned to employment.” 29 C.F.R
§ 2530.203-3(c)(2). Defendants therefore argue that the condition in Section 3.06(c)
requiring that “the provisions of 29 C.F.R § 2530.203-3 are satisfied” incorporates by
reference the definition of “section 203(a)(3)(B) service.” ECF No. 61 at 25–26.
Even if that were true (which is questionable), that would not save the Trustees. To
deny actuarial increases in benefits under the Pension Plan, the plain language of Section
3.06(c) requires two conditions to be met: (1) the participant is engaged in “Disqualifying
Employment,” as that term is defined by the Pension Plan; and (2) all other conditions of
29 C.F.R § 2530.203-3 are met. Even if condition (2) was satisfied, condition (1) is not,
for the reasons articulated above.
Grandson was never engaged in “Disqualifying
Employment.”
In fact, the citation to 29 C.F.R § 2530.203-3 in Section 3.06(c) cuts against
Defendants’ interpretation. The citation demonstrates that the drafters of Section 3.06(c)
were aware of the “commenced or would have commenced” language in 29 C.F.R
§ 2530.203-3(c)(2), yet only included the “commenced” language in the definition of
“Disqualifying Employment.” The difference in language between the definitions of
“Disqualifying Employment” and “section 203(a)(3)(B) service” presumably conveys a
difference in meaning. See Larson v. Nationwide Agribusiness Ins. Co., 739 F.3d 1143,
1148 (8th Cir. 2014) (explaining that “when parties to the same contract use such different
14
language to address parallel issues . . . it is reasonable to infer that they intend this language
to mean different things”) (citation omitted).
The Trustees’ argument that the definition of “section 203(a)(3)(B) service” serves
as the definition of “Disqualifying Employment” may have been reasonable had
“Disqualifying Employment” not been explicitly defined in the Pension Plan. In such a
case, the Trustees might reasonably have understood the term “Disqualifying
Employment” in Section 3.06(c) to refer to “section 203(a)(3)(B) service,” incorporated by
reference by the citation to 29 C.F.R § 2530.203-3. But here, “Disqualifying Employment”
was explicitly defined by the Pension Plan in a manner different than 29 C.F.R § 2530.2033’s definition of “section 203(a)(3)(B) service,” and the Trustees are not entitled to ignore
the applicable plan term. See, e.g., Hayes v. Twin City Carpenters, No. 17-cv-05267
(ECT/BRT), 2019 WL 3017747, at *10 (D. Minn. Jul. 10, 2019).
Accordingly, based on the specific Pension Plan language in effect at the time that
Grandson turned 62, the Trustees’ interpretation of the Pension Plan runs counter to the
plain language of the Pension Plan.
2.
Compliance with ERISA
Defendants are correct that ERISA does not require a plan to provide an actuarial
increase in benefits to compensate for the period after normal retirement age that payment
of the benefits is deferred because the recipient is engaged in “section 203(a)(3)(B)
service.” ECF No. 61 at 27–28 (citing Atkins v. Nw. Airlines, Inc., 967 F.2d 1197, 1201
(8th Cir. 1992)). But Defendants’ erroneous denial of benefits due under the plain language
of the Pension Plan trespassed upon ERISA’s core purpose: “to ensure the integrity of
15
written plans and to protect the expectations of participants and beneficiaries.” Admin.
Comm. of Wal-Mart Stores, Inc. Assocs.’ Health & Welfare Plan v. Shank, 500 F.3d 834,
838 (8th Cir. 2007). Accordingly, although the Court does not weigh this factor against
Defendants, the Court holds that this factor does not outweigh the Trustees’
misinterpretation of unambiguous plan language. See Luke v. IKON Office Sols. Inc., No.
00-cv-2755 (JRT/FLN), 2002 WL 1835645, at *7 (D. Minn. Aug. 1, 2002) (holding that
although Defendants’ interpretation did not conflict with ERISA, “this factor is not
sufficient to overcome defendants’ erroneous interpretation of the unambiguous provisions
of the Plan”); Lao v. Hartford Life & Accident Ins. Co., 319 F. Supp. 2d 955, 962 (D. Minn.
2004) (same).
3.
Meaningless or Internally Inconsistent Pension Plan Language
According to Defendants, interpreting Section 3.06(c) to deny actuarial increases in
benefits only to those participants who commenced benefits would render that section
meaningless because “[t]hat class of participants can never be eligible for a late retirement
increase,” and therefore Section 3.06(c) would not apply to Grandson “or anyone else,
ever.” ECF No. 61 at 16, 25. Not so: the definition of “Disqualifying Employment” simply
makes clear that a participant is no longer eligible for an actuarial increase in benefits once
the participant begins to receive benefits. Properly understood, Section 3.06(c) allows a
participant (like Grandson) to continue working after the normal retirement age while
accruing an actuarial increase in benefits, losing the opportunity to gain the actuarial
increase in benefits only after the participant actually retires and begins receiving benefits.
In this way, the Pension Plan’s cut-off for an actuarial increase in benefits is keyed not to
16
the normal retirement age (as it is in 29 C.F.R § 2530.203-3), but to the time at which the
participant retires and begins receiving benefits.
Of course, it is peculiar that the Pension Plan’s definition of “Disqualifying
Employment” inexplicably varies from the definition of “section 203(a)(3)(B) service.”
But it is not this Court’s role to second-guess the language of the Pension Plan, for this
Court must “enforce the terms of ERISA plans as they are written.” Vercellino v. Optum
Insight, Inc., 26 F.4th 464, 469 (8th Cir. 2022). Because Defendants’ interpretation of
Section 3.06(c), when read in the context of the entire Pension Plan, would essentially
ignore the specific definition of “Disqualifying Employment” in the Pension Plan as
written, Defendants’ interpretation is unreasonable.
See King, 414 F.3d at 1004–05
(explaining that even if a party’s interpretation “might be a reasonable interpretation of the
language standing alone . . . it is not reasonable in the context of this policy, because it
renders meaningless other important policy language”).
4.
Goals of the Pension Plan
Defendants assert that the goal of the Pension Plan is to treat similarly-situated
participants equally, and that Grandson’s interpretation of the Pension Plan would require
similarly-situated participants—such as a participant who begins receiving benefits at age
62 but immediately begins working again, and a participant who simply continues working
past the age of 62—to be treated differently. ECF No. 61 at 26–27. Defendants’ argument
is undermined by their inability to point to any language in the Pension Plan that actually
articulates that goal. See Lao, 319 F. Supp. 2d at 961–62 (determining a plan’s goal by
reference to the plan’s language); Armstrong v. Great Lakes Higher Educ. Corp., No. 0017
cv-1543 (JRT/FLN), 2002 WL 459077, at *4 (D. Minn. Mar. 18, 2002) (same). Moreover,
it is debatable whether an employee like Grandson is similarly situated to an employee who
commences benefits and begins working again, given that the Pension Plan benefits from
not having to immediately pay benefits to an employee like Grandson who delays
commencement of benefits. 10
In any event, “the goal of any plan is to provide coverage consistent with its terms.”
Darvell v. Life Ins. Co. of N. Am., No. 07-cv-2113 (PJS/RLE), 2008 WL 5120993, at *11
(D. Minn. Dec. 3, 2008). A plan interpretation like the Trustees’ that “erroneously deprives
employees of benefits which would otherwise be due them under the unambiguous terms”
of the plan cannot be consistent with plan objectives. Lickteig, 61 F.3d at 585.
5.
Consistency of Interpretation
Defendants point to evidence from the Pension Plan’s third-party administrator
demonstrating that from 2007 to 2024, no Pension Plan participants who continued
working in Disqualifying Employment after age 62 received an actuarial increase. 11 ECF
Similarly, Social Security beneficiaries can receive an increase in the amount of
their old-age benefit if they do not commence benefits at the full retirement age. See 20
C.F.R. § 404.313. Delayed retirement benefits exist in that context to protect the long-term
solvency of the Social Security program. Amendments to Regulations Regarding
Withdrawal of Applications and Voluntary Suspension of Benefits, 75 Fed. Reg. 76256,
76256 (Dec. 8, 2010). The same could be said of Grandson: his delay in commencing
benefits protects the long-term solvency of the Pension Plan.
10
Grandson argues that this evidence cannot be considered because it is outside of the
administrative record. ECF No. 69 at 2–6. The Court considers this evidence for the
limited purpose of evaluating the Trustees’ consistency in interpreting the Pension Plan.
See Leighton v. Delta Air Lines, Inc., No. 19-cv-1089 (JNE/JFD), 2022 WL 980301, at *7
(D. Minn. Mar. 31, 2022) (considering a prior, non-binding arbitral decision to assess a
11
18
No. 61 at 22–24. Although at first blush this evidence suggests a consistent interpretation
of the Pension Plan by the Trustees, the Court is not persuaded that this factor weighs in
Defendants’ favor for three reasons.
First, Defendants disregard the fact that the definition of “Disqualifying
Employment” was materially different prior to 2019. From January 1, 2015, to May 1,
2019, the Pension Plan defined “Disqualifying Employment” as:
Forty (40) hours or more per month of work in the industry for any Employer
or, work in the industry within the jurisdiction of the Union for an employer
in the same or related business as any Employer, or self-employment in the
industry within the jurisdiction of the Union in the same or related business
as any Employer.
ECF No. 66 at 83–84. Notably, this definition of “Disqualifying Employment” does not
contain the “at the time that the participant commenced benefits” language that is included
in the 2019 amendment to the definition. Under the plain meaning of the 2015 definition
of “Disqualifying Employment,” any plan participant who continued working after the age
of 62 (like Grandson) was ineligible for an actuarial increase in benefits. But the fact that
the Trustees denied an actuarial increase in benefits to employees like Grandson from 2015
to 2019 is irrelevant because the definition of “Disqualifying Employment” during that
period was materially different than the specific definition that applies to Grandson now.
plan administrator’s consistency in interpreting plan language). This is a relevant Finley
factor for the Court to analyze, and it is necessary to look outside the four corners of the
Pension Plan to understand how it has been interpreted in similar circumstances. And at
the end of the day, Defendants’ evidence is largely unhelpful to their position given that
most of the evidence of consistency in the Doblar Declaration (ECF No. 62) is readily
distinguishable from Grandson’s circumstances and the remaining evidence is based on a
small sample size.
19
Second, although the Pension Plan did not include a definition of “Disqualifying
Employment” from 2007 to 2015, the plans in effect during that period also contain
materially different language that excludes the concept of withholding an actuarial increase
in benefits only after “the participant commenced benefits.” ECF No. 56-2 at 26; ECF
No. 56-4 at 25. The material variation between the terms of the Pension Plans from 2007
to 2015 and the terms of the Pension Plan in 2019 further undercuts Defendants’ claim of
consistent interpretation.
Third, as for the consistency of the Trustees’ interpretation from 2019 to present, the
Court observes that “if the interpretation is unreasonable from the beginning, such an
interpretation may still be arbitrary and capricious.” Morgan v. Mullins, 643 F.2d 1320,
1324 n.4 (8th Cir. 1981); see also Lao, 319 F. Supp. 2d at 961 (“[A] consistently
unreasonable interpretation is arguably worse than an inconsistently unreasonable one.”).
Even crediting the limited evidence of consistency from 2019 to the present, the Court is
not persuaded that this consistently unreasonable interpretation should weigh in
Defendants’ favor.
In sum, after balancing the Finley factors—and heeding the Eighth Circuit’s
directive that “significant weight” be given to an unreasonable interpretation of
unambiguous plan language, Lickteig, 61 F.3d at 585—the Court concludes that the
20
Trustees abused their discretion in denying Grandson an actuarial increase in benefits. The
Court therefore grants Grandson’s motion and denies Defendants’ motion on Count I. 12
II.
Attorneys’ Fees and Costs
Although Grandson does not formally move for summary judgment on his claim for
attorneys’ fees, he states that he “will submit an affidavit supporting his fees and costs” if
he prevails. ECF No. 55 at 33. However, as Defendants correctly point out, Grandson
must do more than that. ECF No. 67 at 43. An award of attorneys’ fees and costs under
the relevant ERISA fee-shifting provision is discretionary, see 29 U.S.C. § 1132(g)(1), and
requires consideration of various non-exclusive factors, see Johnson v. Charps Welding &
Fabricating, Inc., 950 F.3d 510, 525 (8th Cir. 2020). Grandson’s briefing contains no
analysis of the relevant factors. Thus, the Court defers consideration of Grandson’s request
for attorneys’ fees and costs until such time that Grandson seeks those fees and costs by
appropriate motion under Fed. R. Civ. P. 54(d).
CONCLUSION
Based upon the foregoing, and all the files, records, and proceedings herein, IT IS
HEREBY ORDERED that:
1.
Grandson’s Motion for Summary Judgment (ECF No. 53) is GRANTED;
Because the Court grants summary judgment to Grandson on Count I based upon
the plain language of the Pension Plan, the Court does not address Grandson’s alternative
arguments that purported notice deficiencies and procedural irregularities render the
Trustees’ decision unreasonable. See ECF No. 55 at 23–25. Additionally, because the
Court grants summary judgment to Grandson on Count I, the Court will not address
Grandson’s alternative count for breaches of fiduciary duty. See Silva v. Metro. Life. Ins.
Co., 762 F.3d 711, 728 (8th Cir. 2014). The Court observes, however, that multiple material
factual disputes appear to permeate Grandson’s fiduciary-duty claims.
12
21
2.
Defendants’ Motion for Summary Judgment (ECF No. 59) is DENIED;
3.
Within 21 days of the entry of this Order, Grandson shall meet and confer
with Defendants regarding damages; and
4.
Within 28 days of this Order, the parties shall file a joint status report to the
Court explaining what action, if any, the Court should take with respect to damages.
LET JUDGMENT BE ENTERED ACCORDINGLY.
Dated January 27, 2025
s/Laura M. Provinzino
Laura M. Provinzino
United States District Judge
22
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