Gonzalez v. Local 553 Pension Fund et al
Filing
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OPINION AND ORDER re: 17 MOTION to Dismiss . filed by Local 553 Pension Fund, Trustees of the Local 553 Pension Fund, 28 JOINT LETTER MOTION for Oral Argument addressed to Judge Lorna G. Schofield from Robert Bach da ted 04/26/2017. filed by Angel Gonzalez. For the reasons herein, summary judgment is GRANTED. The parties' joint motion for oral argument, Docket No. 28, is DENIED as moot. The Clerk of Court is directed to close the motions at Docket No. 17 and 28, and close the case. (Signed by Judge Lorna G. Schofield on 7/28/2017) (kgo)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
ANGEL GONZALEZ,
:
Plaintiff,
:
:
v.
:
:
LOCAL 553 PENSION FUND, et al.,
:
Defendants. :
:
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7/28/2017
16 Civ. 8893 (LGS)
OPINION AND ORDER
LORNA G. SCHOFIELD, District Judge:
Plaintiff Angel Gonzalez (“Plaintiff”) commenced this action against Local 553 Pension
Fund and the Trustees of the Local 553 Pension Fund (collectively, “Defendants”) after
Defendants allegedly improperly suspended Plaintiff’s early retirement benefits for engaging in
“Disqualifying Employment.” Defendants filed a motion to dismiss the Complaint under Rule
12(b)(6), which the Court converted to a motion for summary judgment. For the reasons below,
summary judgment is granted.
I.
BACKGROUND
The facts that follow are undisputed and drawn from the First Amended Complaint (the
“Complaint”) and the administrative record. They are construed in the light most favorable to
Plaintiff, as the non-moving party. See Doe v. Columbia Univ., 831 F.3d 46, 48 (2d Cir. 2016).
Plaintiff worked for employers who had collective bargaining agreements with Local 553
International Brotherhood of Teamsters. Due to Plaintiff’s employment, Plaintiff was a
participant in the Local 553 Pension Fund (the “Plan”). The Plan is a multi-employer trust fund
within the meaning of the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C.
§ 1001, et seq. Defendants are the Plan and the Trustees of the Local 553 Pension Fund (the
“Trustees”), who administer the Plan.
Plaintiff participated in the Plan for approximately 33 years as a “serviceman,” whose job
it was to “service and repair heating equipment.” On May 31, 2014, Plaintiff retired and began
collecting retirement benefits as an early retiree. Also in May 2014, Plaintiff began work as New
York Territorial Sales Manager for Carlin Combustion Technology (“Carlin”), “a division of
C. Cowles and Company, [which] manufactures and sells heating equipment to wholesalers in
the heating industry.”
In 2014, Defendants learned that Plaintiff was working for Carlin. At their December 12,
2014, Trustees’ meeting, Defendants determined that Plaintiff was engaged in “Disqualifying
Employment” under the terms of the Plan and voted to suspend his retirement benefits effective
January 1, 2015. Defendants notified Plaintiff of the suspension in a letter dated December 12,
2014. The letter stated that Plaintiff’s employment violated Section 7.8 of the Plan, which states,
in pertinent part:
(a)
Before Normal Retirement Age
(i)
The monthly benefits shall be suspended for any month in which a Participant is
employed in “disqualifying employment” before he has attained Normal
Retirement Age. “Disqualifying employment,” for the period before Normal
Retirement Age, is any type of employment with (A) any Employer who has a
Collective Bargaining Agreement with any Union affiliated with the petroleum
products or service of heating, ventilation or air conditioning equipment industry,
(B) any trucking employer who has a Collective Bargaining Agreement with any
other Local Union affiliated with petroleum products or services of heating,
ventilation or air conditioning equipment industry, or (C) any other industry
engaged in the installation, repair and maintenance of heating, ventilation or air
conditioning equipment.
In February 2015, Plaintiff appealed Defendants’ decision to suspend his benefits,
arguing that “(1) he did not work in the industry covered by the Pension Plan and (2) as a
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salesman of equipment, he did not ‘perform any trade or craft found in the industry.’” In a letter
dated May 7, 2015, Defendants notified Plaintiff that his appeal was denied, and that the
Department of Labor Regulations (the “Regulations”) on which Plaintiff’s arguments had relied,
did not apply to pre-normal retirement age pensioners.
On November 16, 2016, Plaintiff initiated this action, alleging that (1) “[t]he Trustees did
not provide Mr. Gonzalez with an independent or full and fair revue [sic] of his appeal, because
they reviewed their own decision to suspend the payment of Mr. Gonzalez’s retirement benefit”;
(2) “the Trustees were arbitrary and capricious in determining that Mr. Gonzalez was employed
in the ‘same industry’ as defined by [29 C.F.R. § 2530.203-3(c)(2)(i)]”; and (3) “the Trustees
arbitrarily and capriciously concluded that Mr. Gonzalez performed a trade or craft in the
industry covered by the contributing employers to the plan and improperly suspended his
retirement benefits.” On April 20, 2017, Defendants filed their motion to dismiss the Complaint
under Federal Rule of Civil Procedure 12(b)(6). Subsequently, the Court converted Defendants’
motion to dismiss to a motion for summary judgment under Federal Rule of Civil Procedure
Rule 56 and provided the parties the opportunity to submit any additional pertinent material,
which they declined.
II.
LEGAL STANDARD
Summary judgement should be granted where the record establishes that “there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a matter of
law.” Fed. R. Civ. P. 56(a); accord Proctor v. LeClaire, 846 F.3d 597, 607 (2d Cir. 2017).
There is a genuine dispute “if the evidence is such that a reasonable jury could return a verdict
for the nonmoving party.” Fireman’s Fund Ins. Co. v. Great Am. Ins. Co. of N.Y., 822 F.3d 620,
631 n.12 (2d Cir. 2016) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).
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“[O]nly disputes over facts that might affect the outcome of the suit under the governing law will
properly preclude the entry of summary judgment.” Pippins v. KMPG, LLP, 759 F.3d 235, 252
(2d Cir. 2014) (quoting Demery v. Extebank Deferred Comp. Plan (B), 216 F.3d 283, 286 (2d
Cir. 2000)). The court must construe the evidence and draw all reasonable inferences in favor of
the non-moving party. See Wright v. N.Y. Dep’t of Corr., 831 F.3d 64, 71–72 (2d Cir. 2016).
“Although generally an administrator’s decision to deny benefits is reviewed de novo,
where, as here, written plan documents confer upon a plan administrator the discretionary
authority to determine eligibility,1 [courts] will not disturb the administrator’s ultimate
conclusion unless it is arbitrary and capricious.” Hobson v. Metro. Life Ins. Co., 574 F.3d 75, 82
(2d Cir. 2009) (internal quotation marks omitted); accord Zeuner v. Suntrust Bank Inc., 181 F.
Supp. 3d 214, 219 (S.D.N.Y. 2016). “[A]rbitrary and capricious means without reason,
unsupported by substantial evidence or erroneous as a matter of law.” Roganti v. Metro. Life.
Ins. Co., 768 F.3d 201, 210–11 (2d Cir. 2015) (internal quotation marks omitted). “Where both
the plan administrator and a spurned claimant offer rational, though conflicting, interpretations of
plan provisions, the administrator’s interpretation must be allowed to control.” McCauley v.
First Unum Life Ins. Co., 551 F.3d 126, 132 (2d Cir. 2009); accord DeCesare v. Aetna Life. Ins.
Co., 95 F. Supp. 458, 481 (S.D.N.Y. 2015).
De novo review is inapplicable here. “[A] plan under which an administrator both
evaluates and pays benefits claims creates the kind of conflict of interest that courts must . . .
weigh as a factor in determining whether there was an abuse of discretion, but does not make de
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Section 8.6 of the Plan’s terms confers upon the Trustees of the Plan “sole and absolute
discretion, to administer, apply and interpret the Plan and any other Plan documents and to
decide all matters arising in connection with the operation or administration of the Plan.”
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novo review appropriate.” McCauley, 551 F.3d at 133 (citing Metro. Life Ins. Co. v. Glenn, 554
U.S. 105, 111 (2008)).
De novo review also is inapplicable because, contrary to Plaintiff’s assertion,
Defendants’ notice of suspension complied with the Department of Labor’s claims-procedure
regulations, 29 C.F.R. § 2560.503-1(g). See Halo v. Yale Health Plan, 819 F.3d 42, 45 (2d Cir.
2016) (holding that where a plan fails to comply with the Department of Labor’s claimsprocedure regulations, de novo review applies “unless the plan has otherwise established
procedures in full conformity with the regulation and can show that its failure to comply with the
regulation in the processing of a particular claim was inadvertent and harmless.”). The notice of
suspension stated that Plaintiff’s retirement benefit was being suspended under Section 7.8 of the
Plan because he was engaged in disqualifying employment as an employee of Carlin. The notice
attached Sections 7.7 and 7.8 of the Plan, which pertain to retirement and the suspension of
retirement benefits, as well as a form affidavit that invited Plaintiff to respond to specific
questions about his reemployment. Lastly, the notice advised Plaintiff that, if he wished to
appeal, he would need to explain why he was not engaged in disqualifying employment and
provide supporting documentation. At Plaintiff’s request but before his appeal, Defendants
further specified that the suspension was pursuant to Section 7.8(a)(i)(C) of the Plan, which
includes as “disqualifying employment” “any type of employment with . . . any other industry
engaged in the installation, repair and maintenance of heating, ventilation or air conditioning
equipment.” Defendants’ complied with the claims-procedure regulations by advising Plaintiff
of the reason for the adverse determination and the specific plan provision at issue. See 29 CFR
§ 2560.503-1(g)(1). No additional information was necessary for Plaintiff to perfect his claim,
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so none was identified. See id. Consequently, arbitrary and capricious -- not de novo -- review
applies.
III.
DISCUSSION
The Complaint is styled as pleading three separate claims, but each is more properly
construed as an argument that Defendants acted arbitrarily and capriciously than as an
independent cause of action. These arguments are addressed below. Summary judgment is
granted because, for the reasons that follow, no reasonable factfinder could find that Defendants’
decision to deny Plaintiff’s appeal of the suspension of his retirement benefits was arbitrary and
capricious.
A. Defendants’ Conflict of Interest
As a threshold matter, the Complaint alleges that Defendants labored under a conflict of
interest that caused Plaintiff to be deprived of “a full and fair review by the appropriate named
fiduciary of the decision denying the claim,” as required under 29 U.S.C. § 1133(2). Plaintiff is
correct that “[a]n ERISA-fund administrator that ‘both evaluates claims for benefits and pays
benefits claims’ is conflicted,” and that Defendants’ conflict must be considered “as a factor in
[the Court’s arbitrary and capricious] analysis.” Zeuner, 181 F. Supp. 3d at 219–20 (quoting
Durakovic v. Bldg. Serv. 32 BJ Pension Fund, 609 F.3d 133, 138 (2d Cir. 2010)); accord Glenn,
554 U.S. at 112. As Plaintiff has failed to proffer evidence that Defendants’ conflict actually
affected their decision, however, Defendants’ conflict is not entitled to any weight. Zeuner, 181
F. Supp. 3d at 219–20 (“The significance of the conflict in the Court’s analysis will vary with the
circumstances, but ‘[n]o weight is given to a conflict in the absence of any evidence that the
conflict actually affected the administrator’s decision.’”) (quoting Durakovic, 609 F.3d at 140);
accord Roganti, 786 F.3d at 218–19.
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Plaintiff’s assertion that Defendants’ conflict of interest affected their decision is
unpersuasive because Plaintiff offers no evidence to support it. “Evidence that a conflict
affected a decision may be categorical (such as ‘a history of biased claims administration’) or
case specific (such as an administrator’s deceptive or unreasonable conduct), and may have
bearing also on whether a particular decision is arbitrary and capricious.” Durakovic, 609 F.3d
at 140 (citing Glenn, 554 U.S. at 117–18); see also Andrews v. Realogy Corp. Severance Pay
Plan for Officers, No. 13 Civ. 8210, 2015 WL 736117, at *7 (S.D.N.Y. Feb. 20, 2015)
(summarizing cases where courts have found that a conflict actually affected the plan
administrator’s decision-making). Plaintiff does not proffer any such evidence. Plaintiff’s
statements that Defendants’ application of the Plan’s language “was not done in good faith” and
that “the entire process was slanted to deny [Plaintiff’s] claim” are not evidence, but conclusory
statements, neither of which is supported by the administrative record. Likewise, Plaintiff’s
unsubstantiated statements that Defendants failed to review any evidence other than
Mr. Gonzalez’s business card, to provide Plaintiff “relevant information,” and to “properly
investigate his appeal” do not evidence a “pattern to deny Mr. Gonzalez a full and fair review.”
B. Arbitrary and Capricious Analysis
Because the administrative record and the Plan’s plain language support Defendants’
interpretation of the Plan and undermine Plaintiff’s, no reasonable factfinder could conclude that
Defendants’ denial of Plaintiff’s appeal was arbitrary and capricious.
Section 8.6 of the Plan confers upon Defendants “sole and absolute discretion, to
administer, apply and interpret the Plan and any other Plan documents and to decide all matters
arising in connection with the operation or administration of the Plan.” The relevant provisions
of the Plan are Sections 7.7 and 7.8. In Section 7.7, the definition of “Retirement before Normal
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Retirement Age” includes “complete withdrawal from the trucking industry and any other
industry engaged in the installation, repair and maintenance of oil heating, refrigeration, airconditioning or similar equipment or any employer engaged in such activities.” Section 7.8 of
the Plan, which governs the suspension of retirement benefits, similarly includes in the definition
of “disqualifying employment” (before normal retirement age) as “any type of employment with
. . . (C) any other industry engaged in the installation, repair and maintenance of heating,
ventilation or air conditioning equipment.”
Defendants interpret these provisions as precluding any employment in the petroleum
products or heating industry. This interpretation is reasonable and consistent with the Plan’s
plain language. See McCauley, 551 F.3d at 132 (“Where both the plan administrator and a
spurned claimant offer rational, though conflicting, interpretations of plan provisions, the
administrator’s interpretation must be allowed to control.”).
Plaintiff does not dispute that he is employed as New York Territorial Sales Manager at
Carlin, which, according to the Complaint, “manufacturers and sells heating equipment to
wholesalers in the heating industry.” Plaintiff instead argues that the Plan’s decision was “based
on the preconceived and undocumented notions that Mr. Gonzalez was ‘engaged in the
installation, repair and maintenance of heating . . . equipment.’” In support of this argument,
Plaintiff asserts that “[t]he Fund did not have any records of the tasks performed or the skills
required by the employees” and that “[t]he relevant information to compare the work done by the
mechanics and the work done by Mr. Gonzalez as a salesman was readily available to the
Trustees, but they elected not to access it.” Plaintiff further asserts that, “[i]f the Fund wanted to
restrict work to all employment related to the heating industry, the plan provision should have
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read: ‘any type of employment in: C) any industry engaged in heating ventilation or air
conditioning.’”
Plaintiff’s argument that disqualifying employment “is not any or all employment in the
heating industry,” and that Defendants should have compared his responsibilities to those of
mechanics, flatly contradicts the Plan’s plain language. Sections 7.7 and 7.8 of the Plan are clear
that “retirement” requires complete withdrawal from the relevant industry, and that
“disqualifying employment” includes any type of employment in the relevant industry.
Plaintiff’s interpretation ignores these requirements. Under the Plan’s plain language, if Plaintiff
was engaged in the relevant industry -- as Defendants determined that he was -- the nature of his
job is irrelevant. Defendants’ interpretation of Section 7.8 as prohibiting reemployment in the
heating industry, likewise, is a reasonable construction of the Plan’s relevant provisions, and is
consistent with the definition of “industry” in Section 7.8(b)(iv) the Plan documents. See
Anthony v. Local 295/Local 851 – IBT Emp’r Grp. Pension Trust Fund Bd. of Trs., No. 13 Civ.
5730, 2016 WL 5314654, at *6 (E.D.N.Y. Sept. 22, 2016) (finding that a plan administrator’s
decision to deny disability benefits was not arbitrary and capricious, in part, because it was
“reasonable and consistent with the plain language of the Plan”).
Defendants’ conclusion that Plaintiff is employed in the heating industry and, therefore,
that he is engaged in disqualifying employment was supported by substantial evidence. In
denying Plaintiff’s appeal, Defendants stated that, “based on the facts and circumstances of this
case, . . . [Plaintiff’s] employment . . . constitutes work in an industry engaged in the installation,
repair and maintenance of heating, ventilation, or air conditioning equipment.” The
administrative record reflects that Plaintiff repeatedly described Carlin as a manufacturer of
products “for the heating industry,” and that Plaintiff’s job responsibilities include “sell[ing]
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heating equipment products to wholesalers who sell heating equipment” and conducting
“diagnostic testing of boiler equipment, as well as sales of similar services and products[] as he
performed when he was employed by Local 553 employers.” The Complaint also acknowledges
that Plaintiff’s role at Carlin required him to perform diagnostic testing of boiler equipment,
albeit infrequently.2 Based on these facts and evidence, which include Plaintiff’s own
statements, Defendants’ determination that Plaintiff is employed in the heating industry, and
therefore, that he is engaged in disqualifying employment under the Plan is not arbitrary or
capricious. See Cirincione v. Plumbers Local Union No. 200 Pension Fund, No. 07 Civ. 2207,
2009 WL 3063056, at *4 (E.D.N.Y. Sept. 24, 2009) (concluding that the plan administrator did
not act arbitrarily or capriciously in determining that plaintiff was engaged in prohibited
reemployment, in part, based on the plaintiff’s own statements that he was employed in the
industry), aff’d, 404 F. App’x 524 (2d Cir. 2010) (summary order).
Plaintiff’s argument (framed as causes of action) that he was not engaged in the same
“industry, trade or craft” as his former employer, as defined by the Regulations implementing
ERISA, is unavailing because neither ERISA nor the Regulations apply to the suspension of
benefits before age 65. Section 203(a) of ERISA states, in relevant part, “Each 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. ERISA, therefore, “gives [P]laintiff no
vested right to receive benefits until he reaches” age 65. Chambless v. Masters, Mates & Pilots
Pension Plan, 571 F. Supp. 1430, 1440 (S.D.N.Y. 1983) (quoting Riley v. MEBA Pension Trust,
2
The Complaint does not specifically identify performing diagnostic testing of boiler equipment,
but admits that Plaintiff performs “one task” that is “the same type of work as [that of] plan
participants.” Such diagnostic testing is the only task that is specifically referenced in the
Trustees’ meeting minutes. Plaintiff’s admission arises in the context of a discussion of those
meeting minutes.
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452 F. Supp. 117, 120 (S.D.N.Y. 1978), aff’d, 586 F.2d 968 (2d Cir. 1978)); accord DeVito v.
Local 553 Pension Fund, No. 02 Civ. 4686, 2005 WL 167590, at *5 (S.D.N.Y. Jan. 26, 2005)
(“The only limit on the suspension of benefits, therefore, is that the retiree must receive his
normal retirement benefits at the normal retirement age.”). The Regulations, in turn, provide that
“[a] plan may provide for the suspension of pension benefits which commence prior to the
attainment of normal retirement age . . . for any reemployment and without regard to [Section
203(a)] and [the DOL’s implementing] regulation.” 29 C.F.R. § 2530.203-3(a). As Plaintiff
does not allege that Defendants withheld his normal age retirement benefits, Defendants’
interpretation of the Plan’s relevant terms is permitted to differ from the Regulations’ definitions.
Plaintiff’s argument (also styled as a cause of action) that Defendants failed adequately to
investigate his claim fails as well. Plaintiff does not identify any evidence in the administrative
record that Defendants failed to consider or that they rejected without due consideration.
Instead, Plaintiff argues that Defendants should have obtained the “written protocols or tune-up
procedures for their servicemen and mechanics” or reviewed the “O/NET . . .[,] a computer
based collection of job description [sic] in the national economy.” Contrary to Plaintiff’s
assertion, Defendants were not required to supplement the administrative record with evidence to
bolster Plaintiff’s claim. S.M. v. Oxford Health Plans (N.Y.), Inc., 94 F. Supp. 3d 481, 502 n.24
(S.D.N.Y. 2015) (“The Second Circuit has never found that ERISA fid uciaries have a duty to
gather information.”), aff’d sub nom. S.M. v. Oxford Health Plans (N.Y.), 644 F. App’x 81 (2d
Cir. 2016) (summary order); accord Topalian v. Hartford Life Ins. Co., 945 F. Supp. 2d 294, 352
(E.D.N.Y. 2013); Young v. Hartford Life & Acc. Ins. Co., No. 09 Civ. 9811, 2011 WL 4430859,
at *11 (S.D.N.Y. Sept. 23, 2011), aff’d, 506 F. App’x 27 (2d Cir.2012) (summary order).
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Plaintiff’s reliance on the Second Circuit’s decision in Roganti v. Metropolitan Life
Insurance Co. is misplaced. See 786 F.3d at 213. In Roganti, the Second Circuit held that
“[n]othing . . . requires plan administrators to scour the countryside in search of evidence to
bolster a petitioner’s case.” Id. (internal quotation marks omitted and alterations in original).
Although the Court noted that “under certain circumstances, it may be arbitrary and capricious
. . . to reject a claimant’s evidence . . . without making a reasonable effort to develop the record
further,” it also stated that “a claimant’s evidence may simply be insufficient to establish his
entitlement to benefits, even in the absence of evidence tending to refute his theory of
entitlement.” Id. (internal citations omitted). Here, Plaintiff has failed to proffer sufficient
evidence from which a reasonable factfinder could conclude that Defendants’ denial of his
benefits claim was arbitrary and capricious.
IV.
CONCLUSION
For the reasons herein, summary judgment is GRANTED. The parties’ joint motion for
oral argument, Docket No. 28, is DENIED as moot. The Clerk of Court is directed to close the
motions at Docket No. 17 and 28, and close the case.
Dated: July 28, 2017
New York, New York
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