AICHER v. IBEW LOCAL UNION NO. 269 JOINT TRUST FUNDS OFFICE et al
Filing
98
OPINION filed. Signed by Judge Freda L. Wolfson on 5/31/2017. (km)
*NOT FOR PUBLICATION*
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
__________________________________
:
RICHARD T. AICHER, JR.,
:
:
Civil Action No.: 12-1781 (FLW)
Plaintiff,
:
:
v.
:
:
OPINION
IBEW LOCAL UNION NO. 269
:
JOINT TURST FUNDS OFFICE,
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et al.,
:
:
Defendants.
:
__________________________________ :
WOLFSON, District Judge:
Pursuant to the Employee Retirement Income Security Act (“ERISA”), 29
U.S.C § 1132(a), et seq., Plaintiff Richard T. Aicher, Jr. (“Aicher” or “Plaintiff”)
brought this suit, inter alia, to recover past pension benefits that Plaintiff alleges
were improperly denied by the Board of Trustees of IBEW Local Union 269
Pension Plan (the “Trustees”). Plaintiff also names the following defendants in
his Complaint: IBEW Local Union No. 269 Joint Trust Funds Office (the “Joint
Funds Office”), Board of Trustees of IBEW Local Union No. 269 Annuity Fund,
Board of Trustees of IBEW Local Union No. 269 Health & Welfare Fund, Board
of Trustees of IBEW Local Union No. 269 Supplemental Welfare Fund, Board of
Trustees of IBEW Local Union No. 269 Joint Apprenticeship Fund 1, and IBEW
1
These various Boards of Trustees are also referred to as the “Joint Board.”
1
Local Union No. 269 Pension Plan (the “Plan”)(collectively, “Defendants”).
Plaintiff previously moved for partial summary judgment on Count III, illegal
interference under ERISA, and Count IV, recovery of pension payments. Having
found that the Trustees’ stated reasons for denying Plaintiff certain retirement
benefits did not survive judicial scrutiny, the Court stayed the case, 2 and
remanded this matter for further administrative review. Because the Trustees,
on remand, sustained their previous denial of benefits, the parties have brought
their differences back to court, and in the instant matter, Plaintiff, once again,
moves for summary judgment on Counts III and IV, arguing that the Trustees’
decision is plainly erroneous under the applicable ERISA standards. Plaintiff
also seeks attorney’s fees and costs pursuant to ERISA’s fee-shifting provision.
Defendants also move for summary judgment, but not on merits of the
claims; rather, Defendants argue that certain named defendants should be
dismissed from suit. For the reasons set forth herein, Defendants’ motion for
summary judgment is GRANTED in part and DENIED in part as follows: 1)
defendant IBEW Local Union No. 269 Pension Plan is dismissed as a defendant
in Counts I and II; 2) defendants IBEW Local Union No. 269 Pension Plan and
Board of Trustees of IBEW Local Union No. 269 Pension Plan are the only proper
defendants to be named in Counts III and IV, all other defendants are dismissed
from those two counts.
Next, Plaintiff’s motion for summary judgment is also GRANTED in part
Plaintiff also brought retaliation and wrongful termination claims. Those
claims were stayed pending remand.
2
2
and DENIED in part. Summary judgment is granted as to Count IV, wrongful
denial of ERISA benefits, and the total amount of the judgment awarded is
$109,681.27, which includes an award of prejudgment interest in the amount of
$636.47. However, Plaintiff’s motion is denied as Count III of the Complaint.
Plaintiff’s application for attorneys’ fees and costs is denied without prejudice.
BACKGROUND
The following facts are not disputed, unless otherwise noted. From 1971
to 1992, Aicher worked as an electrician for employers who were parties to the
Collective Bargaining Agreement (“CBA”) between IBEW Local Union No. 269 and
the Mercer County Division of the Southern New Jersey Chapter of the National
Electrical Contractors Association. See Plaintiff’s Statement of Undisputed Facts
(“Pl’s Facts ”), ¶ 1. Thereafter, from 1992 to 2010, Aicher was employed as the
Assistant Business Manager (“ABM”) of the Union, id. at ¶ 2, and his job duties
included “organizing, representing the Union in grievances and contract
negotiations” with other organizations. Id. at ¶ 3. According to Plaintiff, in 2007,
as the ABM, he “began serving in an unpaid role as managing trustee of the Joint
Funds Office,” which work was unrelated to the position of the ABM. Id. at ¶¶
6-7. Importantly, Defendants do not dispute that Plaintiff took on this task
during the relevant time period. See Defendants’ Statement of Undisputed Facts
(Defs’ Facts”), ¶ 6.
The Joint Board of the Trustees of the Union’s benefit plans established
the Joint Funds Office to administer employee contributions to the Union’s
benefit plans. Id. at ¶ 4. The Director of the Joint Funds Office was responsible
3
for the day-to-day operations of the office. Id. at ¶ 5. In June 2010, Stephen
Aldrich, the Union’s newly elected Business Manager, informed Plaintiff that he
intended to eliminate Plaintiff’s ABM position and terminate the Director of the
Joint Funds Office, and appoint Plaintiff as the full-time Administrative Manager
of the Joint Funds Office. Id. at ¶ 9. Plaintiff accepted the offer, and assumed
that position on July 12, 2010. His salary was approximately 30% less than his
previous position as the ABM. Id. at ¶¶ 11, 24. As the Administrative Manager,
Plaintiff’s job duties were managerial and administrative in nature; they included
“supplying information requested by the accounting and financial professionals
who handled the funds’ accounting, audits and investments, collecting
delinquent contributions from participating employers and responding to
questions from plan participants.” Id. at ¶ 13. According to Plaintiff, he did not
perform estimates, supervise electricians or conduct electrical work at this
position. Id. at ¶ 14.
Plaintiff was a participant in the Plan, which is governed by ERISA. Id. at
¶ 20. As of January 1, 2004, based on Plaintiff’s then-age of fifty-two and his
thirty-three years of credited service, Plaintiff was 100% vested in his pension,
and he was eligible to receive normal retirement pension payments. See Pension
Plan, Article IV(2)(b); Pl’s Facts, ¶ 22. Since Plaintiff did not retire, however, he
continued to contribute to his pension.
According to Plaintiff, in June 2010, before he accepted the position as the
Administrative Manager, Plaintiff contemplated taking his pension to offset the
reduction in his pay, and he emailed the Plan’s Attorney, Michael T. Scaraggi,
4
Esq., to inform Mr. Scaraggi of his intentions. Pl’s Facts, ¶¶ 26, 30. Indeed,
after Mr. Scaraggi and Plaintiff discussed his pension payments, Mr. Scaraggi
prepared a form through which Plaintiff could waive his right to accrue pension
credits under the Plan. 3 Id. at ¶¶ 27-28, 32. On August 27, 2010, Plaintiff
submitted an application for pension benefits to the Third-Party Administrator
of the Plan, I.E. Schaffer (the “Plan Administrator”), along with his signed waiver
of pension credits. Id. at ¶¶ 33-34. On that same day, Plaintiff met with the
Trustees of the Plan and informed them of the waiver of his right to accrue
pension benefits, that he was exercising his right to receive a retirement pension
from the Plan, and that he was continuing his employment as the Administrative
Manager for the Joint Funds Office. Id. at ¶ 36.
Subsequently, on September 3, 2010, the Joint Board held a meeting to
discuss Plaintiff’s proposed arrangement to retire for pension purposes and
continue to work at the Joint Funds Office.
Id. at ¶ 42.
The Joint Board
expressed concerns over the impact of Plaintiff’s proposal on the “rank and file
union members.” Id. at ¶ 43. According to Plaintiff, because of “office politics,”
the Trustees “determined that Aicher either had to be a participant of all Benefit
Funds including the Local 269 Pension Plan or retire.” Id. at ¶ 44. And, Plaintiff
claims that the Plan Administrator was instructed not to process Plaintiff’s
pension application. Id. at ¶ 47. Moreover, at that time, there was no written
According to Plaintiff, other Plan participants were receiving pension
benefits while gainfully employed, including Ken Shea, the president of Carlin
Electric, who was a Trustee of the Plan, and David Rowe, a former electrician
who was performing estimates for Lessner Electric. Pl’s Facts, ¶ 29. However,
these facts are disputed by Defendants.
3
5
denial of Plaintiff’s benefit request. See id. at ¶ 53. In fact, Plaintiff did not
receive any written response to his pension application any time prior to
Plaintiff’s termination in December 2011. Id. at ¶ 61.
In November 2011, Plaintiff hired an attorney to correspond with the
Trustees regarding his pension application.
Id. at ¶ 62. In that letter, the
attorney advised that “if [Aicher] d[oes] not receive a written determination within
ten (10) days, [Aicher] would construe the silence as a denial and file an appeal;
and, if the appeal were ignored, he would file suit.” Id. at ¶ 63. On December
15, 2011, three weeks after Plaintiff’s attorney had insisted that the Trustees
address his pension claim, the Joint Board terminated Plaintiff’s employment.
Id. at ¶ 66.
On January 3, 2012, after Plaintiff’s termination, the Plan Administrator
approved Plaintiff’s August 2010 application for pension benefits, which was
effective January 1, 2012. Id. at ¶ 69. The approval did not set forth any reason
for approving the pension application with an effective date of January 1, 2012,
rather than September 1, 2010, as requested by Plaintiff. Id. at ¶ 70. Plaintiff
appealed the decision to the Plan’s Trustees, and claimed on appeal that he was
entitled to receive pension benefits as of September 1, 2010, based on his age
and years of service. See id. at ¶¶ 71-73. In that appeal, Plaintiff also argued
that his request for pension payments from September 1, 2010, did not run afoul
of the Plan, since his position as the Administrative Manager at the Joint Funds
Office was not work in an electrical trade or craft. 4 Id. at ¶ 74.
4
As discussed infra, under Article VI(6)(b) of the Plan, “[i]f a Pensioner
6
On February 29, 2012, the Trustees, who oversaw the appeal, denied
Plaintiff’s claim for retroactive pension benefits. Id. at ¶ 79. In a one-page letter,
the Trustees reasoned that Plaintiff was estoppped from claiming retroactive
pension benefits because he (i) failed to raise the Trustee’s failure to decide his
claims for benefits at any time between August 27, 2010, when he submitted his
pension claim, and his counsel’s November 23, 2011 correspondence; and (ii)
Plaintiff had received pension credits during his employment as Administrative
Manager. See Letter Decision dated February 29, 2012. The decision did not
address any issue relating to whether Plaintiff’s employment as Administrative
Manager constituted work in an electrical trade or craft.
In March 2012, Plaintiff initiated this suit claiming that Defendants: (1)
wrongfully terminated him; (2) retaliated against him for pursuing his pension
benefits; (3) interfered with Plaintiff’s right to receive a retirement pension from
the Plan; and (4) improperly denied Plaintiff his retirement pension. Plaintiff
claims that he is entitled to retroactive pension payments. In March 2014, both
parties moved for summary judgment on Counts III and IV of the Complaint.
This Court issued an Opinion and Order dated October 20, 2014, denying both
motions.
The Court rejected the Trustees’ stated reasons for the denial of
accepts employment in the electrical construction industry, pension payments
accrued after January 1, 2002 and payable prior to attainment of age 62 shall
immediately cease as of the first of the month next following the date of such
employment, except if employed as a teacher/instructor of an IBEW approved
training program or as an electrical inspector.” Pension Plan, Article VI(6)(b).
The gist of Plaintiff’s argument regarding why he is entitled to receive pension
payments while working as the Administrative Manager of the Joint Funds
Office, is that the position of the Administrative Manager was not work in the
“electrical construction industry” as defined under Article VI(6)(b).
7
Plaintiff’s pension benefits, but remanded Plaintiff’s claim for retroactive pension
benefits to the Trustees to make the determination, for the first time, whether
Plaintiff’s employment as the Administrative Manager of the Joint Funds Office
disqualified him from pension benefits under Article VI(6)(b).
On June 29, 2015, following this Court’s decision, Plaintiff submitted a
claim letter to the Trustees, asserting three bases entitling Plaintiff to his
requested pension: 1) Article VI(6)(b) is unenforceable because it violates ERISA’s
non-forfeiture provision; 2) Plaintiff’s employment as Administrative Manager
was not in the “electrical construction industry”; and 3) Plaintiff’s employment
at the Joint Funds Office was not in the same “trade or craft” as his prior
employment as an electrician or the ABM. See O’Connor Correspondence dated
June 29, 2015.
In response, on September 10, 2015, the Trustees denied
Plaintiff’s claim based solely on their conclusion that the position of
Administrative Manager was in fact “in the electrical construction industry.” See
Scaraggi Correspondence dated September 10, 2015. Once the second denial
was issued, Plaintiff returned to this Court and appealed the Trustees’ 2015
decision.
In the instant matter, Plaintiff, once again, moves for summary judgment
on Counts III and IV of the Complaint. Defendants, on the other hand, do not
seek summary judgment on the merits as to any of the claims; instead,
Defendants contend that a number of defendants must be dismissed from this
lawsuit because Plaintiff has failed to assert any liability against them. I will
address the substance of Defendants’ motion, first.
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DISCUSSION
I.
Summary Judgment Standard
Summary Judgment is appropriate “if the pleadings, depositions, answers
to interrogatories, and admissions on file, together with the affidavits, if any,
show that there is no genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law.” Fed. R. Civ .P. 56(c). A factual
dispute is genuine only if there is “a sufficient evidentiary basis on which a
reasonable jury could find for the non-moving party,” and it is material only if it
has the ability to “affect the outcome of the suit under governing law.” Kaucher
v. County of Bucks, 455 F.3d 418, 423 (3d Cir. 2006); see also Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986). Disputes over irrelevant or unnecessary
facts will not preclude a grant of summary judgment. Anderson, 477 U.S. at 248.
“In considering a motion for summary judgment, a district court may not make
credibility determinations or engage in any weighing of the evidence; instead, the
non-moving party’s evidence ‘is to be believed and all justifiable inferences are
to be drawn in his favor.’” Marino v. Indus. Crating Co., 358 F.3d 241, 247 (3d
Cir. 2004) (quoting Anderson, 477 U.S. at 255)); see also Matsushita Elec. Indus.
Co. v. Zenith Radio Corp., 475 U.S. 574, 587, (1986); Curley v. Klem, 298 F.3d
271, 276-77 (3d Cir. 2002).
The party moving for summary judgment has the initial burden of showing
the basis for its motion. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). “If the
moving party will bear the burden of persuasion at trial, that party must support
its motion with credible evidence . . . that would entitle it to a directed verdict if
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not controverted at trial.” Id. at 331. On the other hand, if the burden of
persuasion at trial would be on the nonmoving party, the party moving for
summary judgment may satisfy Rule 56’s burden of production by either (1)
“submit[ting] affirmative evidence that negates an essential element of the
nonmoving party’s claim” or (2) demonstrating “that the nonmoving party’s
evidence is insufficient to establish an essential element of the nonmoving party’s
claim.” Id. Once the movant adequately supports its motion pursuant to Rule
56(c), the burden shifts to the nonmoving party to “go beyond the pleadings and
by her own affidavits, or by the depositions, answers to interrogatories, and
admissions on file, designate specific facts showing that there is a genuine issue
for trial.” Id. at 324; see also Matsushita, 475 U.S. at 586; Ridgewood Bd. of Ed.
v. Stokley, 172 F.3d 238, 252 (3d Cir. 1999). In deciding the merits of a party’s
motion for summary judgment, the court’s role is not to evaluate the evidence
and decide the truth of the matter, but to determine whether there is a genuine
issue for trial. Anderson, 477 U.S. at 249. Credibility determinations are the
province of the factfinder. Big Apple BMW, Inc. v. BMW of N. Am., Inc., 974 F.2d
1358, 1363 (3d Cir. 1992).
There can be “no genuine issue as to any material fact,” however, if a party
fails “to make a showing sufficient to establish the existence of an element
essential to that party’s case, and on which that party will bear the burden of
proof at trial.” Celotex, 477 U.S. at 322-23. “[A] complete failure of proof
concerning an essential element of the nonmoving party’s case necessarily
renders all other facts immaterial.” Id. at 323; Katz v. Aetna Cas. & Sur. Co., 972
10
F.2d 53, 55 (3d Cir. 1992).
II.
Defendants’ Motion for Summary Judgment
Counts I and II of the Complaint relate to Plaintiff’s allegations of wrongful
termination and retaliation, respectively, in violation of ERISA.
Without
identifying which defendant is liable for such alleged acts, Plaintiff, in a
wholesale manner, avers that Defendants, collectively, are answerable to these
claims.
In that regard, Defendants argue that because the alleged conduct in
these two counts involves Plaintiff’s termination from his employment as the
Administrative Manager, only Plaintiff’s then-employer, the Joint Funds Office,
may be named in those two causes of action.
In response, Plaintiff maintains that because Defendants admitted in their
Answer that the Joint Board, in addition to the Joint Funds Office, employed
Plaintiff in his position as Administrative Manager, all of the members of the
Joint Board can be named as defendants. For support, Plaintiff points to the
Management Agreement entered into by the various funds; the Agreement stated
that “[t]he Joint Board shall employ an Administrative-Manager who shall be
responsible generally to supervise the day-to-day operation of the Joint Board’s
Office.”
Management Agreement, ¶¶ 2-3.
Based on that language, Plaintiff
contends that he was hired, and supervised, by the Joint Board.
Plaintiff’s
argument is persuasive in this regard. In fact, Defendants admit on this motion
that it was the Joint Board that formally offered Plaintiff the Administrative
Manager position. See Defs’ Facts, ¶ 10. Tellingly, Defendant did not file a reply
brief, responding to this particular argument. In any event, while Defendants
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insist that the Joint Funds Office was Plaintiff’s only employer, they do not
proffer any evidence to establish that the Joint Board took no part in supervising,
or otherwise oversaw, Plaintiff’s employment at the Joint Funds Office. Rather,
based on Plaintiff’s evidence, there is a genuine issue of material fact as to role
that the Joint Board took in Plaintiff’s employment. Therefore, I have no basis
to dismiss the Joint Board, which consists of the various defendant-funds named
in the Complaint, from Counts I and II.
However, there is no dispute that
defendant IBEW Local Union No. 269 Pension Plan was not Plaintiff’s employer,
and therefore, the Plan is dismissed as a defendant in Counts I and II.
Next, Defendants argue that all of the named defendants, with the
exception of the Plan, should be dismissed from Counts III and IV. In those
counts, Plaintiff alleges that Defendants, collectively, interfered with, and
improperly denied, Plaintiff’s application for his retroactive pension benefits.
According to Defendants, based on Plaintiff’s own allegation that it was the Plan
that denied Plaintiff’s claim for benefits, Counts III and IV can only be asserted
against the Plan. Defendants reason that since Plaintiff asserts no wrongdoing
against other defendants, except for the Plan, in Counts III and IV, they must be
dismissed.
Indeed, there is no dispute that the Plan is properly named as a defendant
in Counts III and IV. ERISA provides that claims for benefits arising out of an
ERISA plan, such as the Plan in this case, should be brought against that plan
as a separate entity. See 29 U.S.C. § 1132(d)(1)-(2). In fact, the Third Circuit
has explained that a proper defendant in a claim for wrongful denial of benefits
12
under ERISA “is the plan itself or a person who controls the administration of
benefits under the plan.” Evans v. Employee Benefit Plan, 311 Fed. Appx. 556,
558 (3d Cir. 2009) (citing 29 U.S.C. § 1132(a)(1)(B)). The “defining feature of the
proper defendant” for such a claim is whether the party “exercise[ed] control over
the administration of benefits.” Id. In that regard, other entities, such as an
employer, may also be sued in an ERISA suit for the recovery of benefits if that
entity exercises authority or control over 1) the management of the plan, 2) the
management and disposition of the assets, or 3) the administration of the plan.
See Evans, 311 F. App’x at 558.
Here, the Plan designates the Trustees of the IBEW Local Union No. 269
— which is a separate entity from the Joint Board — as the named fiduciary
“who shall control and manage the operation and administration of the Plan, or
delegate such responsibilities as permitted by the Agreement and Declaration of
Trust, and shall establish rules, make determinations and interpret and decide
all matters arising in connection with such administration and, in connection
therewith, they shall act in all respects in accordance with the Agreement and
Declaration of Trust.”
See Pension Plan, Article IX(1).
While the Trustees
designated a third-party claim administrator, I.E. Schaffer, to administer the
claim in the first instance, the Trustees retain the authority to decide all claim
matters related to the Plan.
Indeed, here, Plaintiff appealed the Plan
Administrator’s initial denial to the Trustees, who ultimately denied Plaintiff’s
benefit claims.
On this motion, Plaintiff maintains that his employers, i.e., the Joint
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Funds Office and the Joint Board, are appropriate defendants in Counts III and
Counts IV, because his employers instructed the Plan Administrator to ignore
Plaintiff’s pension application and instructed Mr. Scaraggi, the Plan’s attorney,
to inform Plaintiff that he had to make a choice between his benefits and his job.
However, Plaintiff has proffered no evidence that the Joint Board directed the
Plan Administrator to ignore Plaintiff’s application. Rather, Plaintiff only cites to
the deposition of Jonathan Levine, a representative of the Plan Administrator,
who testified that Sherri Bowe, a representative from the Joint Funds Office, told
him to “hold off” on processing Plaintiff’s application. See Levine Dep., T65:1220. But, Mr. Levine did not know who made that decision. Id. at T66:2-7. From
Mr. Levine’s testimony alone, Plaintiff surmises that the Joint Board and the
Joint Funds Office must have instructed the Plan Administrator to hold Plaintiff’s
application in abeyance. This is not sufficient to meet Plaintiff’s burden on this
motion to establish that his employers affirmatively exercised control or
authority over the management of the Plan. Importantly, Plaintiff, in his own
Statement of Undisputed Material Facts, acknowledged that the Trustees made
the determination that Plaintiff “either had to be a participant of all Benefit
Funds including the Local 269 Pension Plan or retire.” Pl’s Facts, ¶ 44. See,
e.g., Murray v. Jeld-Wen Inc., No. 11-2302, 2013 U.S. Dist. LEXIS 3518 (M.D. Pa.
Jan. 9, 2013) (entering judgment for employer/plan administrator where the
plaintiff failed to produce evidence that created “legitimate question regarding
whether [the employer] had some degree of control over the decision to deny [the
plaintiff's] application for disability benefits” where another entity was identified
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“as the claims administrator under the Plan with discretionary authority to
interpret the Plan and make claim determinations”); Narducci v. Aegon United
States, Inc., No.10-955, 2010 U.S. Dist. LEXIS 134514, at *6-7 (D.N.J. Dec. 15,
2010)(dismissing nominal plan administrator where the plan specified that the
claims administrator had discretionary authority to make benefit determinations
because the plan administrator had “no role in determining benefits”).
Accordingly, based on the record, I find that the Plan and the Trustees are
the only proper defendants to be named in Counts III and IV, and all other named
defendants are dismissed from these two counts.
III.
Plaintiff’s Motion for Summary Judgment
A.
Level of Review
The threshold question the Court must determine is the appropriate
standard of review for the Trustees’ denial of pension benefits under ERISA. On
this point, Plaintiff argues that because the Trustees’ determination that Plaintiff
is not entitled to benefits is legal in nature, that decision must necessarily be
reviewed de novo by this Court.
Defendant, however, does not respond to
Plaintiff’s position, but rather, argues that the Trustees’ decision should be
reviewed under the “arbitrary and capricious” standard.
Plaintiff advances, just as he did during the administrative review, three
separate bases for receiving retroactive pension benefits. First, Plaintiff submits
that Article VI(6)(b) violates ERISA’s non-forfeiture provision as a matter of law.
Second, the position of Administrative Manager was not in the electrical
construction industry; and finally, that position was not in the same trade or
15
craft as an electrician or the ABM. To determine the level of review, each of these
bases must be separately analyzed.
As to Plaintiff’s first basis, Plaintiff correctly argues that this Court reviews
de novo pure questions of law determined by an administrator. See Burch v.
Firestone Tire & Rubber Co., 828 F.2d 134, 148-49 (3d Cir. 1987), aff’d in part,
rev’d in part on other grounds, 489 U.S. 101 (1989)(finding that “trustees only
have discretion to decide those matters expressly delegated to them by the trust
instrument,” therefore, when the district court is confronted with legal questions,
“the court must answer them de novo.”); Rosen v. Hotel and Restaurant
Employees, 637 F.2d 592, 597 (3d Cir. 1981) (ignoring arbitrary and capricious
scope of review and determining equitable estoppel claim on the merits, without
any deference to plan administrator); Hannington v. Sun Life & Health Ins., 711
F.3d 226, 230-31 (1st Cir. 2013)(“when a fiduciary's interpretation of the plan is
based on a legal determination, review is de novo.”); Daft v. Advest, Inc., 658 F.3d
583, 594 (6th Cir. 2011) (noting that the deferential standard of review "does not
apply to a plan administrator's determination of questions of law, such as
whether a plan meets the statutory definition of a top-hat plan; a court reviews
those questions de novo"); Weil v. Ret. Plan Admin. Comm. of Terson Co., 913 F.2d
1045, 1049 (2d Cir. 1990) (same), vacated on other grounds, 933 F.2d 106 (2d
Cir. 1991). 5
I must review de novo the Trustees’ determination on the issue whether
Article VI(6)(b) violates ERISA for another reason: the Trustee failed to address
this basis in their decision. It is clear that when a plan administrator, in this
case the Trustees, fails to provide a reason during the administrative review for
rejecting a claimant’s basis for benefits under ERISA, the district court must
5
16
However, contrary to Plaintiff’s position, I must review the Trustees’
determinations on Plaintiff’s remaining bases for benefits under the arbitrary
and capricious standard. Indeed, the Supreme Court has long held that a denial
of benefits under ERISA is to be reviewed “under a de novo standard unless the
benefit plan gives the administrator or fiduciary discretionary authority to
determine eligibility for benefits or to construe the terms of the plan.” Firestone
Tire and Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). Thus, where the plan
affords the fiduciary discretionary authority, the fiduciary's interpretation of the
plan “will not be dismissed if reasonable.” Mitchell v. Eastman Kodak Co., 113
F.3d 433, 437 (3d Cir. 1997)(quoting Firestone, 489 U.S. at 111). In other words,
when a plan fiduciary has discretion to determine a claimant's eligibility for
benefits, the plan fiduciary’s decision is subject to review under an arbitrary and
capricious standard. Doroshow v. Hartford Life and Acc. Ins. Co., 574 F.3d 230,
233 (3d Cir. 2009); Estate of Schwing v. The Lilly Health Plan, 562 F.3d 522, 525
(3d Cir. 2009)(“[C]ourts reviewing the decisions of ERISA plan administrators or
fiduciaries . . . should apply a deferential abuse of discretion standard of review
across the board[.]”).
Put differently, the Third Circuit has advised that “the
deferential standard of review of a plan interpretation is appropriate [] when the
trust instrument allows the trustee to interpret the instrument and when the
trustee has in fact interpreted the instrument.” Gritzer, 275 F.3d at 296.
Here, as previously noted, the Trustees are designated as the named
review that “non-decision” de novo. See Gritzer v. CBS, Inc., 275 F.2d 291, 296
(3d Cir. 2002); see also Becknell v. Severance Pay Plan of Johnson & Johnson,
No. 13-4622(FLW), 2014 U.S. Dist. LEXIS 54684, at *12 (D.N.J. April 21, 2014).
17
fiduciary by the Plan.
See the Plan, Article IX(1).
In Article IX, entitled
Administration, the Plan endows the Trustees with the sole discretion to
establish rules, make claims determinations and, more importantly, the Trustees
have the authority to interpret the terms of the Plan, and they “are the sole judges
of the standard of proof required in any case, and they may adopt such formulas,
methods and procedures as they consider advisable.”
See Article IX(1), (2).
Clearly, based on the authority that the Trustees have been entrusted under the
Plan, the deferential standard of review applies to any claim determinations
and/or plan interpretations made by the Trustees. 6 See Hatchigian v. IBEW,
Local Union No. 98, 532 Fed. Appx. 181, 183 (3d Cir. 2015)(applying the arbitrary
and capricious standard of review to claim decisions made by union trustees
when the plan had designated the trustees with authority to interpret the plan
terms).
Under the deferential review, a decision is arbitrary and capricious only “if
it is ‘without reason, unsupported by substantial evidence or erroneous as a
matter of law.’” Abnathya v. Hoffmann–La Roche, Inc., 2 F.3d 40, 45 (3d Cir.
1993) (quotations and citations omitted). “Substantial evidence” is defined as
“such relevant evidence as a reasonable mind might accept as adequate to
support a conclusion.” Soubik v. Dir., Office of Workers' Comp. Programs, 366
F.3d 226, 233 (3d Cir. 2004).
To decide whether an administrator's
I note that Plaintiff has not raised any conflict of interest issues. But, even
if he does, “as a multi-employer pension fund, as is the case here, the defendants
do not pay beneficiaries from their own funds . . . and thus the Court need not
be concerned about conflicts of interest.” Hatchigian, 532 Fed Appx. at 183 n.1.
6
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determination of benefits is arbitrary and capricious, courts “determine
lawfulness by taking account of several different, often case-specific, factors,
reaching a result by weighing all together.” Miller v. Am. Airlines, Inc., 632 F.3d
837, 855 (3d Cir. 2011)(quoting Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105,
117 (2008)). 7
B.
Count IV – Wrongful Denial of Benefits
1.
ERISA’s Nonforfeiture Requirements
Plaintiff argues that summary judgment on Count IV of the Complaint, i.e.,
wrongful denial of benefits, is appropriate because Article VI(6)(b) of the Plan, as
a
matter
law,
violates
ERISA’s
anti-forfeiture
provision,
29
U.S.C.
§
1053(a)(3)(b)(ii). The pertinent portion of ERISA governing this dispute is § 203(a),
which states that “[e]ach pension plan shall provide that an employee's right to
his normal retirement benefit is nonforfeitable upon the attainment of normal
retirement age . . . .” 29 U.S.C. § 1053(a). That age is defined as the earlier of
“the time a plan participant attains normal retirement age under the plan, or . .
. the time a plan participant attains age 65 . . . .” 29 U.S.C. § 1002(24). 8 The
general rule of § 203(a) is subject to several exceptions. One of these exceptions
While Plaintiff did not specifically argue for the existence of any procedural
irregularities, he did raise issues related to them, such as, inter alia, inconsistent
application of the Plan’s return-to-work provisions to other pensioners.
However, because I find, infra, that the Trustees’ claim determination is arbitrary
and capricious, I need not consider these purported irregularities.
7
While Plaintiff was not 65 years old at the time he submitted claim for
pension benefits, this rule nevertheless applies because under Article IV(2) of the
Plan, Plaintiff has attained normal retirement age.
8
19
allows benefits to be suspended if the pensioner returns to work in the same
industry, trade and geographic area. See 29 U.S.C. § 1053(a)(3)(B)(ii); Geib v.
New York State Teamsters Conference Pension and Retirement Fund, 758 F.2d
973, 975 (3d Cir. 1985). 9 In relevant part, that provision states:
A right to an accrued benefit derived from employer
contributions shall not be treated as forfeitable solely because the
plan provides that the payment of benefits is suspended for such
period as the employee is employed, subsequent to the
commencement of payment of such benefits -(ii) in the case of a multiemployer plan, in the same industry,
in the same trade or craft, and the same geographic area covered by
the plan, as when such benefits commenced.
The Secretary shall prescribe such regulations as may be
necessary to carry out the purposes of this subparagraph . . . .
29 U.S.C. § 1053(a)(3)(B)(ii).
Here, to reiterate, Article IV(6)(b) states: “[i]f a Pensioner accepts
employment in the electrical construction industry, pension payments accrued
after January 1, 2002 and payable prior to attainment of age 62 shall
immediately cease as of the first of the month next following the date of such
employment, except if employed as a teacher/instructor of an IBEW approved
training program or as an electrical inspector.” Pension Plan, Article VI(6)(b).
Plaintiff argues that Article IV(6)(b) violates the ERISA anti-forfeiture rule
In allowing plans to suspend the benefits of retirees who accept certain
kinds of postretirement employment, “Congress seems to have been motivated
at least in part by a desire 'to protect participants against their pension plan
being used, in effect, to subsidize low-wage employers who hire plan retirees to
compete with, and undercut the wages and working conditions of employees
covered by the plan.’” Cent. Laborers' Pension Fund v. Heinz, 541 U.S. 739, 742
n.1 (2004) (quoting 120 Cong. Rec. 29,930 (1974) (statement of Sen. Williams
regarding section 203(a)(3)(B))).
.
9
20
because it provides for the cessation of benefits to any pensioner who accepts
employment in the “electrical construction industry,” without regard to whether
such pensioner is working in the same trade or craft, or in the same geographic
area as when the pensioner’s benefit commenced.
In other words, Plaintiff
contends that Article IV(6)(b) is overly broad in light of the specific conditions set
forth in § 1053(a)(3)(B)(ii). Alternatively, in the same vein, Plaintiff contends that
because the Trustees failed to take into account whether Plaintiff was working
in the same trade or craft when denying his pension benefits, the Trustees’
determination was erroneous in light of federal law.
What is troubling to the Court is that the Trustees do not respond to
Plaintiff’s legal argument in this regard; this issue, however, is significant and
probative in deciding whether the Trustees’ decision to deny Plaintiff’s retroactive
pension benefits is unreasonable. Indeed, the question of whether Article VI(6)(b)
violates ERISA’s nonforfeiture rules is a threshold one, and because the Trustees’
claim determination depends primarily on this provision, the reasonableness of
the Trustees’ decision necessarily turns on the provision’s legality under ERISA;
the two issues are inextricably intertwined. 10 With that said, I begin my analysis
with the Trustees’ stated reasons for their denial of benefits.
First, in their three-page decision, the Trustees determined that the IBEW
Local 269 Pension Plan — which entity the Trustees inexplicably refer to as
Plaintiff’s then-employer before he was terminated as the Administrative
In other words, if the plan provision violates ERISA, the Trustees’ decision
based on that provision would be arbitrary and capricious.
10
21
Manager — qualified as an “Employer” under the Plan. 11
See Pl’s Claim
Determination Letter, dated September 10, 2015, p. 1. The Trustees then found
that as an Administrative Manager at the Joint Funds Office, Plaintiff was an
“Employee” as defined under the Plan. See Id. at pp. 1-2. Indeed, there is no
dispute that Plaintiff’s “Employee” status qualified him to receive the requestedpension benefits under the Plan. Next, the Trustees recited Article VI(6) in its
entirety, including the subject provision, Article VI(6)(b). Article VI(6) sets forth
“return-to-work” rules under the Plan. According to the Trustees, “work in the
electrical construction industry would constitute disqualifying employment.” Id.
at p. 3. Without defining the term “electrical construction industry,” the Trustees
simply explained that this line of work “would not be limited to working with the
tools of the trade but encompasses work in the electrical industry as an
estimator, foreman, business manager of the local union, business agent of the
local union, clerical employee of the IBEW union or benefit funds.” Id.
This
constitutes the sum total of the reasoning that the Trustees provided for their
denial of Plaintiff’s benefits. In conclusion, the Trustees opined that
if Mr. Aicher were permitted to receive pension [benefits] and
continue to be employed as a salaried employee of the Pension Plan
as an Administrator then every clerical employee of the benefit
funds, clerical employee of the local union, business manager of the
local union, business agents of the local union, all of whom are
responsible for the day to day operation of the local union and
Defendants concede that, at the time of his termination, that Plaintiff was
not employed by the IBEW Local Union No. 269 Pension Plan. See Def.
Statement of Uncontested Material Facts, ¶ 16. As such, it was inaccurate for
the Trustees to have designated the Pension Plan as Plaintiff’s then-employer for
the purposes of their claim determination. In any event, this particular portion
of the Trustees’ decision is not relevant to the resolution of the issues in this
case.
11
22
benefit funds within the electrical industry, could receive monthly
pensions and continue to be employed.
Id.
While the claim determination discussed the type of industry with which
Plaintiff engaged, the Trustees did not define the term “electrical construction
industry.”
More importantly, nowhere in Article VI(6)(b), or in the Trustees’
decision was there any discussion of Plaintiff’s former “trade” or “craft.” This is
critical, because, in the context of “return to work rules,” ERISA forbids the
suspension of an accrued benefit derived from employer contributions, except in
the case of a multiemployer plan, such as the Plan in this case, where the
employee was employed 1) in the same industry; 2) in the same trade or craft;
and 3) the same geographic area covered by the Plan.
See 29 U.S.C. §
1053(a)(3)(B)(ii). Indeed, written in the conjunctive, the statute requires all three
conditions be met before the Trustees can freeze pension benefits.
Notably,
ERISA leaves the terms “industry” and “trade” or “craft” undefined, but the
statute explicitly delegates that authority to the Department of Labor (“DOL”).
See 29 U.S.C. § 1053(a)(3)(B). 12 In turn, 29 C.F.R. 2530.203-3, promulgated by
Where Congress has delegated authority to an agency to implement an
ambiguous statute, courts are required to accept the agency's statutory
interpretation, so long as it is reasonable. See Chevron U.S.A. Inc. v. Natural Res.
Def. Council, Inc., 467 U.S. 837, 844 (1984); see also United States v. Mead Corp.,
533 U.S. 218, 226-27 (2001). Here, Congress has so authorized the DOL to
"prescribe such regulations as may be necessary to carry out the purposes" of
section 203(a)(3)(B). 29 U.S.C. § 1053(a)(3)(B). Accordingly, these regulations are
entitled to deference under Chevron. See Eisenrich v. Minneapolis Retail Meat
Cutters, 574 F.3d 644, 650 (8th Cir. 2009)(“We conclude that the Department of
Labor's regulation represents a reasonable interpretation of ‘trade or craft’ and
is entitled to deference under Chevron.”).
12
23
the DOL, defines the term “industry” as “the business activities of the types
engaged in by any employers maintaining the plan.” 29 C.F.R. § 2530.2033(c)(2)(i). The regulation goes on to define a “trade” or “craft” as:
(A) a skill or skills, learned during a significant period of training or
practice, which is applicable in occupations in some industry, (B) a
skill or skills relating to selling, retailing, managerial, clerical or
professional occupations, or (C) supervisory activities relating to a
skill or skills described in (A) or (B) of this paragraph (c)(2)(ii). For
purposes of this paragraph (c)(2)(ii), the determination whether a
particular job classification, job description or industrial occupation
constitutes or is included in a trade or craft shall be based upon the
facts and circumstances of each case. Factors which may be
examined include whether there is a customary and substantial
period of practical, on-the-job training or a period of related
supplementary instruction.
29 C.F.R. § 2530.203-3(c)(2)(ii). Based on the plain language of the regulations,
it was incumbent upon the Trustees, here, to consider whether Plaintiff’s
employment was in the same industry — as well as whether the Administrative
Manager position was in the same trade or craft as Plaintiff’s previous
employment.
See Gardner v. Central States, Southeast and Southwest Areas
Pension Fund, No. 93-3070, 1993 U.S. App. LEXIS 34130, at *25-26 (6th Cir.
Dec. 21, 1993)(finding that 29 C.F.R. § 2530.203-3(c)(2) “is written in the
conjunctive, and thus only applies when a pensioner, who has reached normal
retirement age, engages in reemployment that meets each of the conditions set
forth in the rule.”) The case law supports this conclusion.
Unfortunately, there is a dearth of precedent in the Third Circuit dealing
with ERISA’s nonforfeiture rules in this specific context. However, I find various
out-of-circuit cases instructive.
In Tapley v. Locals 302 and 612 of the
International Union of Operating Engineers-Employers Construction Industry
24
Retirement Plan, 728 F.3d 114 (9th Cir. 2013), the trustees of a pension plan
determined that the plaintiff-pensioners’ respective post-retirement jobs as a
traffic flagger and snow plow operator fell into the same “job classification” as
their former union jobs as skilled mechanics. Relevant in that case, the “postretirement service” rules of the pension plan defined employment as: (a) within
the geographic area covered by the Plan which for purposes of this Section shall
consist of all of the State of Alaska and the State of Washington; (b) in a job
classification in which the Participant was employed while in Covered
Employment, whether or not such employment is under the terms of a Collective
Bargaining Agreement or written Contribution Agreement or in a supervisory
capacity over such job classification; and (c) in the industry in which the
Individual Employers participate (any business activity of the type engaged in by
the Individual Employers maintaining the Plan). Reviewing the plan language,
the circuit court first found that the term “job classification” does not comport
with the regulation’s definition of “trade or craft.” Id. at 1140 n.2. Rather, the
court explained that the manner in which the trustees defined “job classification”
unreasonably expanded the plan to “sweep within its ambit an overly broad
range of skills.” Id. at 1141 (citing Eisenrich v. Minneapolis Retail Meat Cutters
& Food Handlers Pension Plan, 544 F. Supp. 2d 848, 857 (D. Minn. 2008), aff'd
in relevant part, 574 F.3d 644 (8th Cir. 2009)). In that regard, the court held
that the trustees’ determination was arbitrary, and cautioned that “[t]he
availability of earned retirement benefits cannot be frustrated by an untethered
interpretation” of a pension plan that is inconsistent with ERISA. See id. at
25
1143.
Even more persuasive, in Smith v. CMTA-IAM Pension Trust, 654 F.2d 650
(9th Cir. 1981), the defendant pension trust operated a multiemployer pension
plan and denied plaintiff his employee benefits when he reached the age of 62
years because, according the trust, plaintiff remained employed in the same
industry for an employer who participated in the pension plan. Plaintiff filed suit,
alleging that the pension trust’s suspension provision violated the nonforfeiture
rule of § 203(a) of ERISA. The operative post-retirement employment is defined
under the plan as “[a]ny retired member who is or becomes employed in the
metal trades industry or for a participating employer . . . shall receive no benefits
for the month following any month in which he is so employed . . . .” Id. at 653
n. 1. The circuit court found that “[t]he trustees’ decision to suspend [plaintiff’s]
benefits was not based on his fulfillment of the three prerequisites described in
section [1053](a)(3)(B)(ii).” Id. at 658-59. Rather, the court reasoned, the benefits
were suspended because the trustees determined that the plaintiff was employed
in the metal trades industry, and for a participating employer either of which
type of employment was an independent ground for suspension under the plan.
Id. at 659. Having made those findings, the appeals court reversed the district
court’s order dismissing plaintiff’s ERISA claim. In so doing, the court explained
that while the trustees properly consider the element of industry, see id. at 659,
they failed to consider whether plaintiff was employed in the “same trade or
craft.” Id. Ultimately, the court found that “suspensions [] that are not expressly
permitted by section [1053](a)(3)(B) [of ERISA] are unlawful even though
26
permitted by the [p]lan.” Id.
Similarly, in Thomson v. I.A.M. Nat’l Pension Fund, 616 F.2d 343 (7th Cir.
1980), the plaintiff, after becoming entitled to retirement benefits under the
pension fund, was asked by the trustees to sign a certification that the plaintiff
must refrain from, inter alia, (a) employment with any employer who contributes
to the fund, (b) employment with any employer in the same or related business
as any employer who contributes to the fund, (c) self-employment in such a
business, and (d) employment or self-employment in any business which is or
may be under the jurisdiction of the union. Id. at 346. Plaintiff brought suit
under ERISA claiming that those restrictions violate ERSIA’s nonforfeiture
provisions. The circuit court agreed and found that those specific restrictions
violated § 1053(a)(3)(B) of ERISA, because they purport to impose limitations on
a retiree's employment that are not expressly permitted by § 1053(a)(3)(B), which
restrictions include “in the same industry” and “in the same trade or craft.” Id.
At least one district court in this circuit has come to the same conclusion.
In Clark v. Greater Pennsylvania Carpenters' Pension Fund, No. 13-928, 2014
U.S. Dist. LEXIS 62487 (W.D. Pa. May 6, 2014), the court granted summary
judgment in the plaintiff’s favor after finding that the defendant-trustees’ overly
broad interpretation of the plan cannot be reconciled with ERISA’s nonforfeiture
provisions. Id. at *10-15. Other district courts are in accord. See Lee v. Sheet
Metal Workers’ Nat’l Pension Fund, 760 F. Supp. 2d 711, 723 (E.D. Mich. 2010)
(finding the trustees’ decision on whether pensioner-plaintiff’s employment after
retirement from the union was arbitrary and capricious, because the trustees,
27
in making their claims determination, failed to comport the plan with the
definitions set forth in 29 C.F.R. § 2530.203-3(c)(2)(ii)); see also DeVito v Local
553 Pension Fund, No. 02-4686, 2005 U.S. Dist. LEXIS 1036, at *21-22 (S.D.N.Y.
Jan. 26, 2005)(holding that because the plan defines “post-normal retirement
age disqualifying employment” only by industry, geographic location and job
classification, but failed to include “trade or craft,” the plaintiff adequately stated
a claim for violation under ERISA nonforfeiture rules, § 1053(a)(3)(B)(ii)). 13
Here, in light of the case law and the Trustees’ cursory decision, I cannot
find that the Trustees’ claim determination was reasonable.
The Trustees
advance several arguments to justify their denial of benefits; I will address them
in turn. First, the Trustees argue that this case is unlike the circumstances
presented in Central Laborers’ Pension Fund v. Heinz, 541 U.S. 739 (2004). Heinz
involved ERISA’s anti-cutback rule, 29 U.S.C. § 1054(g)(2), which provision
prohibits, inter alia, any amendment to the plan that would expand the
categories of post-retirement employment that triggered the suspension of
payment of early retirement benefits already accrued. Id. at 744.
While I agree
with the Trustees that the holding in Heinz is not relevant to this case, the fact
that there are no anti-cutback issues in this case is not dispositive of the
purported violations of ERISA’s nonforfeiture provisions raised by Plaintiff in
Unsurprisingly, virtually all of the decisions that I have reviewed, that
upheld the trustees’ claim determination in the context of suspending a
pensioner-plaintiff’s retirement benefits, dealt with plan provisions that either
have been found to comport with the conditions set forth in § 1053(a)(3)(B)(ii), or
the parties did not argue that any of the plan provisions violated ERISA’s
nonforfeiture rules.
13
28
Count IV.
Next, the Trustees argue that because Plaintiff was an “Employee” under
the Plan at all times when he was employed as an electrician, as the Assistant
Business Manager of Local Union 269, and as the Administrative Manager of the
Joint Funds Office, he never actually retired in order to receive pension benefits
under the Plan. This argument is wholly without merit. For one, there is no
dispute that Plaintiff was entitled to receive “Normal Retirement pension” under
Article IV(2). As such, Plaintiff was certainly eligible to retire at the time he
applied for his pension payments. While the Trustees argue that Plaintiff never
intended to retire and that Plaintiff sought his pension benefits to offset the lower
salary of his Administrative Manager position, that intention is of no moment.
Once Plaintiff sought his benefits, as noted above, ERISA requires the Trustees
to engage in a reasoned analysis — supported by factual determinations — of
whether Plaintiff’s post-retirement position as the Administrative Manager was
in the same industry, trade or craft, and the same geographic location as his
previous employment. 29 U.S.C. § 1053(a)(3)(B)(ii). It is also irrelevant that the
Administrative Manager position was within the Union. Although, admittedly,
that position might have some impact on the post-retirement employment
determinations vis-à-vis ERISA’s nonforfeiture provisions, it was, nevertheless,
incumbent upon the Trustees to engage in those determinations regardless of
the type of employment Plaintiff assumed after his retirement.
Finally, I examine the substantive decision of the Trustees.
In their
decision on remand, the Trustees found that Plaintiff’s work as the
29
Administrative Manager was indeed in the “electrical construction industry” as
set forth in Article VI(6)(B) of the Plan. Nowhere in the Plan is the term “electrical
construction industry” further defined.
According to the Trustees — in a
summary fashion — “[w]orking in the electrical construction industry would not
be limited to working with the tools of the trade but encompasses work in the
electrical industry as an estimator, foreman, business manager of the local
union, business agent of the local union, clerical employee of the IBEW union or
benefit funds.” See Claims Determination, p. 3. Based on this reasoning alone,
the Trustees found that the position of the Administrative Manager was in the
“electrical construction industry.” This analysis is woefully deficient.
According to the DOL’s definition, the term “industry” stands for “the
business activities of the types engaged in by any employers maintaining the
plan.”
29 C.F.R. § 2530.203-3(c)(2)(i).
Hence, following the directive, in
assessing this element, the Trustees must examine whether Plaintiff’s
reemployment involved “working for an employer which is engaged in the same
business activities as employers which make contributions to this Pension
Fund.” Whisman v. Robbins, 55 F.3d 1140, 1149 (6th Cir. 1995). It does not
refer to “the outside industry.” Id. at 1149. There is no analysis by the Trustees
that the tasks performed by an Administrative Manager are similar to those types
of business activities engaged in by other employers which make contributions
to the Plan. The Trustees simply provide a list of skills or jobs that they believe
fall within the “electrical construction industry.” Indeed, while the Joint Board,
as a plan-employer, purportedly contributed to Plaintiff’s pension on his behalf,
30
the Trustees did not assess whether the business activities engaged in by the
Joint Board are consistent with those activities engaged in by other planemployers, such that a determination can be made that Plaintiff was working in
the same industry. On this basis alone, the Trustees’ decision to deny Plaintiff’s
pension benefits is arbitrary and capricious. But, the Trustees’ decision suffers
from a flaw more fatal.
Nowhere in the decision did the Trustee engage in any analysis whether
Plaintiff’s employment after retirement was in the same “trade or craft” as his
previous job. As I stated earlier, to make this determination, the regulations
instruct that “(A) a skill or skills, learned during a significant period of training
or practice, which is applicable in occupations in some industry, (B) a skill or
skills relating to selling, retailing, managerial, clerical or professional
occupations, or (C) supervisory activities relating to a skill or skills described in
(A) or (B) of this paragraph (c)(2)(ii).” 29 C.F.R. § 2530.203-3(c)(2)(ii). In order to
come to a reasoned determination of these factors, the Trustees, under the
regulations, must look to the facts surrounding Plaintiff’s circumstances. As the
Seventh Circuit in Eisenrich observed, “this [regulatory] language [] prohibit[s] a
plan from deciding whether a retiree worked in a ‘trade or craft’ based solely on
the retiree's ‘job classification, job description or industrial occupation.’ Because
a plan must rely on the ‘facts and circumstances of each case,’ it must consider
the ‘skill or skills’ actually used by the retiree in his job.” Eisenrich, 574 F.3d at
650. Under the “functional” approach endorsed by the regulation, “a plan must
look to the skills put to ‘use by the retiree,’ not by other employees in his
31
occupation.” Id. Here, Article VI(6(b) of the Plan does not instruct the Trustees
to examine “trade or craft.” And, the Trustees simply did not engage in the
pertinent analyses in accordance with the obligations under ERISA and its
attendant regulations.
While the record has some information as to what
Plaintiff’s duties were as an Administrative Manager, it is not the task of this
Court, in the first instance, to undertake the necessary analysis for the Trustees
in this appeal.
Rather, “suspensions [] that are not expressly permitted by
section [1053 (a)(3)(B) of ERISA] are unlawful even though permitted by the
Plan.” Smith, 654 F.2d at 659. 14
Accordingly, based on the foregoing reasons, I find that the Trustees’
denial of Plaintiff’s retroactive pension payments for the period of September
2010 to December 2011, is arbitrary and capricious. 15
Thus, summary
I note that Plaintiff did not challenge the Trustees’ determination as to the
geographic location requirement under § 1053(a)(3)(B)(ii). As such, I will not
discuss that element here.
14
The Court may remand this matter to the Trustees or directly grant or
deny benefits. See Carney v. Int'l Broth of Elec. Workers Local Union Pension Fund,
66 Fed. Appx. 381, 386-387 (3d Cir. 2003); see also Lamanna v. Special Agents
Mut. Benefits Ass'n, 546 F. Supp. 2d 261, 302 (W.D. Pa. 2008); Fisher v. Aetna
Life Ins. Co., 890 F. Supp. 2d 473, 486 (D. Del. 2012); Addis v. The Limited LongTerm Disability Program, 425 F. Supp. 2d 610 (E.D. Pa. 2006), aff'd 268 Fed.
Appx. 157 (3d Cir. 2008); Sanderson v. Cont'l Cas. Corp., C.A.01-606, 2005 WL
2340741, at *6 (D. Del. Sept. 26, 2005) ("After a court determines that an
administrator has acted arbitrarily and capriciously in denying a claim for
benefits, the court can either remand the case to the administrator for renewed
evaluation of the claimant's case, or it can award a retroactive reinstatement of
benefits."). Here, while this Court could remand this matter to the Trustees to
make the required assessments outlined in this Opinion, I have already
remanded this matter to the Trustees based on the very issues discussed in this
Opinion, and they failed to adequately perform that task. The delay to Plaintiff
is substantial. Therefore, in my discretion, I am not issuing a remand again.
15
32
judgment is entered in favor of Plaintiff on Count IV of the Complaint.
2.
Remedy
To remedy the wrongful denial of benefits, Plaintiff seeks an award of
$109,044.80, which represents the amount of the pension benefits he should
have received from September 1, 2010 through December 31, 2011. Because
Defendants have not challenged the accuracy of this amount, pursuant to 29
U.S.C. § 1132(a)(1)(B), I find that an award of $109,044.80 to be appropriate.
Next, Plaintiff seeks prejudgment interest to compensate him. The Third
Circuit has held that “interest is presumptively appropriate when ERISA benefits
have been delayed.” Fotta v. Trs. of the UMW Health & Ret. Fund of 1974, 165
F.3d 209, 214 (3d Cir. 1998). In fact, prejudgment interest is ordinarily granted
unless exceptional or unusual circumstances exist making such an award
inequitable. See Anthuis v. Colt Industries Operating Corp., 971 F.2d 999, 1010
(3d Cir. 1992) (“Thus prejudgment interest should ordinarily be granted unless
exceptional or unusual circumstances exist making the award of interest
inequitable.”). An award of prejudgment interest, its rate or amount and the
time period involved, however, is within the court's discretion, tempered by
fairness and equity. Skretvedt v. E.I. Dupont de Nemours, 372 F.3d 193, 205-06
(3d Cir. 2004). In that connection, prejudgment interest is appropriate when the
amount of underlying liability is reasonably ascertainable and the relief granted
would otherwise fall short of making the claimant whole because the use of the
money which was legally due has been denied to the claimant. See Anthuis, 971
F.2d at 1010.
33
Here, I find that an award of prejudgment interest is appropriate in light
of the fact that Defendants deprived Plaintiff the use of his pension benefits for
the relevant time period. Plaintiff seeks an award of prejudgment interest of
$636.47. To calculate this proposed interest, Plaintiff employed postjudgment
interest rate set forth in 28 U.S.C. § 1961, which is “a rate equal to the weekly
average 1-year constant maturity Treasury yield, as published by the Board of
Governors of the Federal Reserve System . . . .” 28 U.S.C. § 1961(a). More
specifically, Plaintiff used the weekly average 1-year constant maturity Treasury
yield for the last week of the preceding month of each pension payment and then
multiplied that amount by the amount of months Plaintiff was deprived of his
benefits. See O’Connor Cert., Exh. 30. I find this rate and method reasonable,
because “the interest rate prescribed for post-judgment interest under 28 U.S.C.
§ 1961 is appropriate for fixing the rate of pre-judgment interest [in ERISA cases]
unless [the court] finds, on substantial evidence, that the equities of that
particular case require a different rate.” Blankenship v. Liberty Life Assur. Co. of
Bos., 486 F.3d 620, 628 (9th Cir. 2007) (citations and quotations omitted); see
Hi-Lex Controls, Inc. v. Blue Cross Blue Shield, 751 F.3d 740, 751 (6th Cir. 2014);
Sheehan v. Guardian Life Ins. Co., 372 F.3d 962, 969 (8th Cir. 2004).
Accordingly, the total amount of the judgment awarded on Count IV of the
Complaint is $109,681.27.
C.
Count III – Improper Interference
In Count III of the Complaint, Plaintiff alleges that Defendants interfered
with his attempt to exercise his right to receive a retirement pension from the
34
Plan. Compl., ¶ 127. In that regard, Plaintiff bases this alleged interference on
the assertion that Defendants discouraged him from obtaining a written
determination of his claim for pension benefits.
Plaintiff also claims that
Defendants instructed the Third-Party Plan Administrator not to process
Plaintiff’s application.
While Plaintiff cites the statutory authority for his
interference claim under 29 U.S.C.§ 1132(a)(3), the proper statutory basis for his
claim is under 29 U.S.C. § 1140. 16
“Section 510 of ERISA prohibits employer conduct taken against an
employee who participates in a pension benefit plan for ‘the purpose of
interfering with the attainment of any right to which such participant may
become entitled under the plan.’” Gavalik v. Cont'l Can Co., 812 F.2d 834, 851
(3d Cir. 1987) (quoting 29 U.S.C. § 1140); Boyle v. Penn Dental Med., No. 163621, 2017 U.S. App. LEXIS 8799, at *(3d Cir. May 19, 2017). Section 1140
states in relevant part: “It shall be unlawful for any person to discharge, fine,
suspend, expel, discipline, or discriminate against a participant or beneficiary
for exercising any right to which he is entitled under the provisions of an
employee benefit plan, this title, section 3001 [29 USCS § 1201] . . . .” 29 U.S.C.
§ 1140.
In his summary judgment motion, Plaintiff claims that he is entitled to
summary judgment on Count III because he has proven that 1) the Trustees
violated § 1104, which provision imposes a fiduciary duty on the Trustees; and
2) the Plan failed to provide adequate notice in writing to Plaintiff of the denial of
his claim for benefits, in violation of § 1133. However, nowhere in the Complaint
does Plaintiff predicate his interference claim in Count III on these alleged
substantive violations. Plaintiff may not rewrite or amend his complaint in his
summary judgment briefing. See Bell v. City of Phila., 275 Fed. Appx. 157, 160
(3d Cir. 2008). Thus, I will not consider these purported violations.
16
35
Congress enacted such a provision primarily to prevent “‘unscrupulous
employers from discharging or harassing their employees in order to keep them
from obtaining vested pension rights.’” Gavalik, 812 F.2d at 851 (quoting West
v. Butler, 621 F.2d 240, 245 (6th Cir. 1980)); see also Zipf v. American Telephone
& Telegraph Co., 799 F.2d at 889, 891 (1986) (citing Butler); Donahue v. Custom
Management Corp., 634 F. Supp. 1190, 1197 (W.D. Pa. 1986) (quoting Butler).
To recover under § 510, a plaintiff must “demonstrate that the defendant had
the specific intent to violate ERISA.” Gavalik, 812 F.2d at 851 (citations and
quotation omitted).
To establish a claim for interference with ERISA rights under Section 510,
a plaintiff must prove (1) the employer engaged in prohibited conduct, (2) taken
for the purpose of interfering, (3) with the attainment of any right to which the
employee may become entitled. Dewitt v. Penn-Del Directory Corp., 106 F.3d 514,
522 (3d Cir. 1997) (citing Gavalik, 812 F.2d at 852). The “prohibited employer
conduct” element under Section 510 includes an employer's decision to
“discharge, fine, suspend, expel, discipline, or discriminate against a participant
or beneficiary.” 29 U.S.C. § 1140. The Third Circuit has limited actionable
conduct under Section 510 to that which affects the employer-employee
relationship. Fischer v. Phila. Elec. Co., 96 F.3d 1533, 1543 (3d Cir. 1996)
(Section 510 ERISA claims are “limited to actions affecting the employeremployee relationship, not mere changes in the level of benefits”) (internal
quotations omitted), cert. denied, 520 U.S. 1116 (1997).
Here, putting aside the evidence Plaintiff proffers on his motion for
36
summary judgment to establish his interference claim, even taking Plaintiff’s
allegations as true — that Defendants discouraged him from filing benefits claim
or that Defendants instructed the Third-Party Plan Administrator to not process
Plaintiff’s application for benefits — Plaintiff has failed to present any actionable
prohibited employer conduct within the meaning of section 510. See Boyles v.
Am. Heritage Life Ins. Co., No. 15-274, 2016 U.S. Dist. LEXIS 96962, at *50-51
(W.D. Pa. Jul. 25, 2016)(finding that dissuading a claimant from filing an ERISA
claim does not amount to prohibited employer conduct under § 510); see also
Jackson v. Rohm & Haas Co., No. 05-4988, 2007 U.S. Dist. LEXIS 67666, at *6
(E.D. Pa. Sept. 12, 2007) (dismissing the plaintiff's claim for interference with
benefits where plaintiff had “alleged conduct unbecoming an ERISA fiduciary,”
but had not alleged any conduct affecting his status as an employee). Because
Plaintiff has not presented any evidence on his interference claim that could
demonstrate
that
Defendants
discharged,
fined,
suspended,
expelled,
disciplined, or discriminated against, Plaintiff for pursuing his ERISA benefits,17
Plaintiff’s motion for summary judgment on this claim is denied. 18
D.
Attorneys’ Fees and Costs
Section 502(g)(1) of ERISA provides that a district court “in its discretion
may allow a reasonable attorney's fee and costs of action to either party.” 29
U.S.C. § 1132(g)(1); see Tomasko v. Weinstock, 357 Fed. Appx. 472 (3d Cir. Dec.
I note that Plaintiff has asserted two separate causes of action for wrongful
termination and retaliation, respectively, in violation of § 510 of ERISA.
17
Defendants have not moved for summary judgment on Count III of the
Complaint.
18
37
18, 2009). In determining whether such a fee award is warranted pursuant to
this provision, courts must consider the following five factors, referred to as the
Ursic factors:
(1) the offending parties' culpability or bad faith;
(2) the ability of the offending parties to satisfy an award of attorneys' fees;
(3) the deterrent effect of an award of attorneys' fees against the offending
parties;
(4) the benefit conferred on members of the pension plan as a whole; and
(5) the relative merits of the parties' positions.
Ursic v. Bethlehem Mines, 719 F.2d 670, 673 (3d Cir. 1983). “While the statutory
provision itself does not dictate that a party must prevail in order to be awarded
attorney's fees, courts have interpreted the statute as requiring a party to prevail
before fees will be awarded.” Local 827 IBEW v. Verizon N.J., Inc., No. 02-1019,
2006 U.S. Dist. LEXIS 56453, at *3 (D.N.J. Aug. 3, 2006)(citing McPherson v.
Employees' Pension Plan of American Re-Insurance Co., Inc., 33 F.3d 253 (3d Cir.
1994) (“[a]ttorneys' fees may be awarded to prevailing parties in actions brought
under [ERISA]”)); O'Malley v. Sun Life Assur. Co. of Am., No. 04-5540, 2006 U.S.
Dist. LEXIS 2770, at *31 (D.N.J. Jan. 23, 2006)(“[b]ecause Plaintiff did not
prevail on her summary judgment motion, the Court will not consider her
request for an award of attorneys’ fees"); see also Martorana v. Bd. of Trustees of
Steamfitters Local Union 420 Health, Welfare and Pension Fund, 404 F.3d 797
(3d Cir. 2005) (noting that “ERISA allows for the award of attorney's fees to the
prevailing party at the discretion of the court”).
38
To determine whether a party is the “prevailing party,” the Court must
analyze whether: “(1) the plaintiff obtained relief on a significant claim in the
litigation; and (2) there is a causal connection between the litigation and the
relief obtained from the defendant.” P.G. v. Brick Twp. Bd. of Educ., 124 F. Supp.
2d 251, 259 (D.N.J. 2000). With respect to the first prong, the Court can
“compare [] the relief sought from the lawsuit and the relief eventually obtained.”
Id.
Here, Plaintiff requests attorneys’ fees and costs, albeit Plaintiff’s counsel
did not include any certifications setting forth the amount of fees or the number
of hours billed. I find that it is premature at this juncture to assess whether
Plaintiff is entitled to fees. While I have entered judgment in Plaintiff’s favor on
Count IV of the Complaint, Counts I and II, i.e., the wrongful termination and
retaliation claims, remain pending in this case. This is significant, because one
of the Ursic factors requires the Court to assess the offending party’s culpability
or bad faith. Depending on the outcome of those causes of action, the Court
would have a complete factual record to determine bad faith. In that regard,
depending on Plaintiff’s ultimate success in this litigation, the Court would be in
a better position to determine whether an award of attorneys’ fees is appropriate
for deterrence purposes, and to assess the degree of benefit conferred upon
members of the pension plan.
Finally, it is also appropriate to defer the
attorneys’ fees considerations because the degree of Plaintiff’s success at the end
of this case would be extremely probative to this Court’s assessment of whether
Plaintiff is a prevailing party. Accordingly, Plaintiff’s request for fees is denied
39
without prejudice; Plaintiff may apply for fees and costs at the conclusion of this
suit.
CONCLUSION
For the reasons set forth above, Defendants’ motion for summary
judgment is GRANTED in part and DENIED in part as follows: 1) defendant
IBEW Local Union No. 269 Pension Plan is dismissed as a defendant in Counts
I and II; 2) defendants IBEW Local Union No. 269 Pension Plan and Board of
Trustees of IBEW Local Union No. 269 Pension Plan are the only proper
defendants to be named in Counts III and IV, all other defendants are dismissed
from those two counts.
Next, Plaintiff’s motion for summary judgment is also GRANTED in part
and DENIED in part. Summary judgment is granted as to Count IV, wrongful
denial of ERISA benefits, and the total amount of the judgment awarded on
Count IV of the Complaint is $109,681.27, which includes an award of
prejudgment interest in the amount of $636.47. However, Plaintiff’s motion is
denied as Count III of the Complaint. Plaintiff’s application for attorneys’ fees
and costs is denied without prejudice.
Dated: May 31, 2017
/s/
Freda L. Wolfson
Freda L. Wolfson, U.S.D.J.
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