Reese v. Cleveland Bakers and Teamsters Pension Fund

Filing 15

Opinion and Order. Defendant's Motion for Judgment on the Administrative Record (Related doc # 8 ) is granted. Judge Christopher A. Boyko on 1/27/2014. (H,CM)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION

MICHAEL REESE,
Plaintiff,
vs.
CLEVELAND BAKERS AND
TEAMSTERS PENSION FUND,

Defendant.

)
)
)
)
)
)
)
)
)
)
)

CASE NO. 1:13CV0526
JUDGE CHRISTOPHER A. BOYKO

OPINION AND ORDER

CHRISTOPHER A. BOYKO, J:
This matter comes before the Court upon the Motion for Judgment on the Administrative
Record by Cleveland Bakers and Teamsters Pension Fund (“Defendant” or “Fund”). (ECF DKT
#8). Michael Reese (“Plaintiff”) contends that Defendant improperly withheld pension benefits
as a result of Plaintiff’s alleged violation of a Fund policy. The Court grants Defendant’s
Motion as reasoned below.

I. FACTUAL BACKGROUND
1

Throughout the 1970s and 1980s, Plaintiff worked in the steel industry and contributed to
the Fund through union payments. (Cmplt. ¶ 8). In 1989, Plaintiff retired from his union job and
co-founded Erie Metals, Inc. (“Erie Metals”) a year later. (Cmplt. ¶¶ 7, 9). Erie Metals is in the
metal business in Northeast Ohio. (Cmplt. ¶ 17).
On May 16, 2011, Plaintiff filed an application seeking to receive retirement benefits that
accrued under the Fund. (Tr. 1-3). On his application, Plaintiff indicated that he was currently
employed as President of Erie Metals. (Tr. 50). The Review Committee determined that
Plaintiff was eligible for some benefits, but he had violated the “prohibited re-employment”
terms of the Fund by working for Erie Metals. (Tr. 88). Under the “prohibited re-employment”
provision, the Fund may withhold pension benefits if Plaintiff is involved in:
(2)

Employment or self-employment in any job classification covered under
either (a) a participation agreement, or (b) a Collective Bargaining
Agreement between a Union and a Contributing Employer or Employer, with
any employer who is a direct competitor of any Contributing Employer or
Employer, including employment at such place or places of business in a
managerial or supervisory position;

(Tr. 167-168) (emphasis added). The Review Committee concluded that Plaintiff’s employment
as President of Erie Metals was a managerial or supervisory position and that Erie Metals
directly competed with Contributing Employers.1 (Tr. 88-91).
Plaintiff appealed the decision to the Board of Trustees of the Cleveland Bakers and
Teamsters Pension Fund (“Board”). (Tr. 101). The Board, basing its decision on the
Administrative Record, concluded that Plaintiff occupied a managerial or supervisory position at
Erie Metals which directly competed with Associated Steel Corporation (“ASC”) and Clifton

1

The Fund defines a Contributing Employer as “any [employer] which has agreed . . . to
make contributions to the Pension Fund[.]” (Tr. 108).
2

Steel Company (“Clifton”), which the Board identified as Contributing Employers. (Tr. 101).
Plaintiff subsequently filed a Complaint asking the Court to enter judgment against Defendant
and to award Plaintiff the disputed unpaid pension benefits. (ECF DKT #1). Defendant then
moved for Judgment on the Administrative Record and Plaintiff timely replied. (ECF DKT
#8,10).
III. STANDARD OF REVIEW
A district court reviews an ERISA plan administrator’s denial of benefits de novo, unless
the plan gives the administrator discretionary authority to grant or deny benefits. Cox v.
Standard Ins. Co., 585 F.3d 295, 299 (6th Cir. 2009). If the plan grants the administrator
discretionary authority, a district court reviews the decision under the highly deferential arbitrary
and capricious standard of review. Id.
In this case, both parties agree that the arbitrary and capricious standard of review
applies. (ECF DKT #8, 10). Under this standard of review, a district court will uphold the
administrator’s decision “if it is the result of a deliberate, principled reasoning process and if it is
supported by substantial evidence.” Bennett v. Kemper Nat’l Servs., Inc., 514 F.3d 547, 552 (6th
Cir. 2008). A district court must merely determine whether “there exists ‘a reasoned
explanation, based on the evidence, for a particular outcome.’” Seiser v. UNUM Provident
Corp., 135 F.App’x 794, 799 (6th Cir. 2005) citing Williams v. International Paper Co., 227
F.3d 706, 712 (6th Cir. 2000).
IV. ANALYSIS
The Board determined that Plaintiff’s employer, Erie Metals, directly competed with
Contributing Employers, violating the terms of the Fund. (Tr. 101). Plaintiff maintains that the

3

Administrative Record fails to establish that Erie Metals directly competes with ASC or Clifton.
(ECF DKT #10). Further, Plaintiff claims that the Administrative Record lacks substantial
evidence to support the conclusion that ASC and Clifton are, in fact, Contributing Employers for
purposes of the “prohibited re-employment” provision. (ECF DKT #10).
For the following reasons, the Court grants Defendant’s Motion because the
Administrative Record contains substantial evidence to support the Board’s decision.
A. The Administrative Record contains substantial evidence to support the Board’s
decision that Erie Metals directly competes with Contributing Employers.
In his brief, Plaintiff claims that the Administrative Record does not contain substantial
evidence to support the Board’s decision that Erie Metals directly competes with Contributing
Employers. Plaintiff’s assertion is misplaced.
The Administrative Record sufficiently indicates that Erie Metals directly competes with
Contributing Employers, such as ASC and Clifton, in the metal business. Erie Metals produces
metals, focusing on construction, automotive, heavy equipment, fluid power, fabricators and
“many other industries.” (Tr. 51). Similarly, the Administrative Record sufficiently
demonstrates that ASC is a direct competitor of Erie Metals in this business. (Tr. 56). Also,
Clifton manufacturers and distributes metal products, supporting the Board’s determination that
Erie Metals and Clifton are direct competitors as well. (Tr. 73). All three companies’ website
pages indicate they engage in the “alloy” business, which is a more specific industry within the
metal business. (Tr. 51-87). Further, the website pages indicate the companies are all engaged
in broader industries within the overall metal business. (Tr. 51-87). These website pages
provide substantial evidence to show the three companies are direct competitors.
Plaintiff claims that although Erie Metals, ASC and Clifton are engaged in the metal
4

business, they occupy different areas of the industry. (ECF DKT #10, Cmplt. ¶ 17). However,
the Court must only determine if a principled reasoning process, with substantial evidence,
supports the Board’s finding that Erie Metals directly competes with ASC or Clifton. Bennett,
514 F.3d at 552. The website pages, regardless of when they were printed, provide substantial
evidence to support this finding. Similarly, they show that the Board underwent an investigatory
process to determine the business practices of each company before making this decision.
Lastly, the correspondences in the record, whether inter-party or intra-party, demonstrate the
substantial level of inquiry the Board considered as well. (Tr. 50, 88, 95, 98, 101). In short, the
Administrative Record provides substantial evidence to support the Board’s finding that Erie
Metals competes with ASC and Clifton.
B. The Administrative Record contains substantial evidence to support the Board’s
decision that ASC and Clifton are Contributing Employers.
Plaintiff alleges that the Administrative Record does not provide substantial evidence to
support the Board’s decision that ASC or Clifton are Contributing Employers. The Fund defines
a Contributing Employer as “any [e]mployer which has agreed. . . to make contributions to the
Pension Fund[.]” (Tr. 108). Under the “prohibited re-employment” provision, Erie Metals must
directly compete with a Contributing Employer for the Board to withhold benefits from Plaintiff.
The Board compared Erie Metals to ASC and Clifton to determine that Erie Metals directly
competed with Contributing Employers. Plaintiff claims that the Board failed to establish that
ASC and Clifton are Contributing Employers. In addition, Plaintiff claims that if ASC and
Clifton are not Contributing Employers, then it was improper for the Board to withhold pension
benefits from Plaintiff. Plaintiff’s assertions are incorrect for the following reasons.
To begin, Plaintiff did not dispute whether ASC or Clifton are Contributing Employers
5

until he replied to Defendant’s Motion for Judgment on the Administrative Record. (ECF DKT
#1). In fact, at paragraph 17 of the Complaint, Plaintiff asserted that “the two Contributing
Employers identified by the Pension Fund. . . with whom Erie [Metals] is alleged to be in direct
competition are not competitors of Erie [Metals].” (Cmplt. ¶ 17). Plaintiff only asserted that
Erie Metals did not directly compete with ASC or Clifton, not that they were not Contributing
Employers. Therefore, Plaintiff conceded that ASC and Clifton are Contributing Employers.
Even assuming that Plaintiff did not concede that ASC and Clifton are Contributing
Employers, there is still substantial evidence to support the Board’s decision to withhold
benefits. In Wildeboer v. Sheet Metal Workers’ Nat. Pension Fund, the court found that the
defendant’s failure to specifically name a contributing employer did not require reversal. 2010
WL 821122, *6 (N.D. Ky. Mar. 5, 2010). The plaintiff in Wildeboer brought suit challenging the
decision of the Board of Trustees to withhold pension benefits because the plaintiff was engaged
in disqualifying employment. Id. at *1. The plaintiff alleged that the Board of Trustees never
specified which contributing employer the plaintiff was directly competing against. Id. at *6.
This argument did not persuade the court, however, and it upheld the Board of Trustees’
decision.
Plaintiff is making a similar assertion as the Wildeboer court faced, and the Court
similarly disagrees with Plaintiff. Plaintiff does not dispute that companies in the metal business
are Contributing Employers, acknowledging that companies similar to ASC and Clifton do
contribute to the fund. Accordingly, it does not matter whether ASC or Clifton are themselves
Contributing Employers, so long as the comparison illustrates that Erie Metals directly competes
with a Contributing Employer. The Administrative Record shows, via website captures, that

6

Erie Metals is in the metal business, similar to some Contributing Employers. (Tr. 51-55).
Therefore, there is substantial evidence to support the Board’s decision that Erie Metals directly
competes with Contributing Employers, regardless of who those Contributing Employers are.
Lastly, Plaintiff did not even attempt to show that ASC and Clifton are not Contributing
Employers. Instead, Plaintiff only questions why the Administrative Record does not
specifically state as much. (ECF DKT #10). But even assuming Plaintiff is correct, the
argument misses the point. The proper question is not whether the companies the Board
compared Erie Metals to are Contributing Employers, but rather whether Erie Metals directly
competes with a Contributing Employer. As shown previously, the Administrative Record
provides substantial evidence to demonstrate as much.
V. CONCLUSION
In sum, the Court grants Defendant’s Motion for Judgment on the Administrative Record
because there is substantial evidence to support the Board’s finding that Erie Metals directly
competes with Contributing Employers.
IT IS SO ORDERED.
s/ Christopher A. Boyko
CHRISTOPHER A. BOYKO
United States District Judge
Dated: January 27, 2014

7