Opinion
Case No. 97 C 1681
July 25, 2000
MEMORANDUM OPINION AND ORDER
The Trustees of the Marine Terminal Welfare Fund (the "Fund") allege that Defendant Fred Woods, a former trustee of the Fund, violated the Employee Retirement Income Security Act of 1974 ("ERISA") by misrepresenting his disability status and eligibility for weekly loss of time benefits. The Trustees seek injunctive relief, restitution with prejudgment interest, costs and attorney's fees. The parties have consented to the jurisdiction of the United States Magistrate Judge pursuant to 28 U.S.C. § 636 (c). This matter is before the Court on Plaintiffs' Motion for Summary Judgment on Liability and Relief. For the reasons explained below, Plaintiffs' Motion for Summary Judgment on Liability and Relief is GRANTED IN PART and DENIED TN PART.
I. FACTUAL BACKGROUND
The following facts are undisputed. The Marine Terminal Welfare Plan (the "Plan"), a multiple-employer benefit plan established pursuant to section 302(c) of the Labor Management Relations Act, 29 U.S.C. § 186 (c), was adopted effective January 1, 1992 and amended and restated effective January 1, 1994. Plaintiffs' Local Rule 12 (M) Statement ¶ 3. The Plan provides welfare benefits, including weekly disability benefits, to employees whose employers participate in the finding of the Plan. Id. The Plan covers full-time employees and officers of Local 19 of the International Longshoremen's Association ("Local 19" or the "Union"), AFL-CIO. Id. Defendant Fred Woods is an employee and former officer of Local 19. Id. ¶ 4. He also was a Plan participant during all relevant times. Id. In addition, Woods was a trustee of the Fund and a fiduciary of the Plan during the timeperiods at issue, May 6, 1992 through August 16, 1992 and September 11, 1993 through October 10, 1993. Id.
Plaintiffs moved for Summary Judgment on Liability and Relief on January 15, 1999. Woods' response was originally due more than four months later on April 23, 1999. On April 30, 1999 Woods requested an extension of time to respond to Plaintiffs' Motion for Summary Judgment. The Court allowed Woods until May 17, 1999 to respond to Plaintiffs' summary judgment motion. Woods did not file his response until May 26, 1999. On Plaintiffs' oral motion, the Court struck Woods' response as untimely and for failing to comply with then Local Rule 12(N)(3). Specifically, Woods failed to file a response to each numbered paragraph in the moving party's 12M Statement and Woods' statement of additional facts failed to include references to the affidavits, parts of the record, and other supporting materials relied on. The Court also notes that Woods' response was not signed by his attorney and none of the supporting affidavits were executed by the affiants nor notarized. Hence, the facts contained in Plaintiffs' Local Rule 12(M) Statement and accompanying exhibits are taken as true for the purposes of this Motion for Summary Judgment.
The Plan provides for the payment of weekly "loss of time" benefits to an employee covered under the Plan, provided that the employee is "totally disabled." Id. ¶ 5. The Plan defines "totally disabled" as "[a] period of disability during which a covered Employee because of non-occupational Injury or Sickness is physically unable to perform any and every duty of his occupation at the time such disability commenced. . . ." Id. ¶ 6. The Plan further provides that "[w]henever payments have been made by the Trustees with respect to charges in a total amount at any time in excess of the maximum amount of payment required under the provisions of the Plan, the Trustees shall have the right to recover such payments . . . from . . . [a]ny persons to . . . whom such payments were made." Id. ¶ 7.
Woods submitted two claims for weekly loss of time benefits, one covering a time period from May 6, 1992 through August 17, 1992 and the other from September 11, 1993 through October 10, 1993. Id. ¶¶ 8-9. In the first claim, Woods contended that his disability was the result of injuries sustained in a car accident on May 5, 1992. Id. ¶ 8. Woods' second claim indicated that he was disabled as a result of surgery performed on September 14, 1993. Id. ¶ 9. With both claims, Woods submitted documentary medical evidence indicating that he was totally disabled during the times in question. Id. ¶¶ 8-9. Under the Plan, Woods was awarded weekly loss of time benefits in the amount of $2,207.14 for the period covering the first claim and in the amount of $492.85 for the period covering the second claim. Id. Despite his receipt of these benefits, Woods testified: "I've never claimed to be totally disabled. I don't know where that came from." Id. ¶ 24.
It appears to be undisputed that during the time periods in which he claims to have been totally disabled — May 6, 1992 through August 16, 1992 and September 11, 1993 through October 10, 1993 — Woods was unable to perform the duties of a longshoreman. During these periods of time, however, Woods was president of Local 19 and performed the duties required as the president, including participating in meetings with the executive board and its members, meeting with others regarding the collective bargaining agreement or safety, and reviewing the financial records of Local 19. Id. ¶¶ 13-14. Performance of such duties required that Woods be "always on call," working on average eight to ten hours a day, Monday through Saturday. Id. ¶ 15. In exchange for performance of these duties, Woods received compensation of $ 100 per week. Id. ¶ 19. Though Woods characterized this compensation as "expense money," he explained that the money he received was for "tak[ing] care of the Union's business." Id. ¶¶ 17, 19. Further, though Woods was required to submit receipts for automobile gasoline used while performing his union duties, he did not submit any similar receipts for the "expense money" received for performance of the Union's business. Id. ¶ 23.
The Fund demanded, in numerous written communications to Woods, that he repay in full the loss of time benefits which he had received for the periods in 1992 and 1993. Id. ¶ 10. Woods repaid $300 "because the Trustees concluded he was obligated to do so" but has refused the Fund's requests that he pay the balance of the money allegedly owed. Id. ¶¶ 10, 24.
II. DISCUSSION
Plaintiffs move for summary judgment on all three counts of their complaint. Count I is brought pursuant to Section 502(a)(3), 29 U.S.C. § 1132 (a)(3), of ERISA to enforce the terms of the Plan. Plaintiffs contend that Woods received disability benefits contrary to the terms of the Plan, thus entitling the Plan to restitution. In Count II, Plaintiffs contend that Woods breached his fiduciary duty by making misrepresentations to obtain Plan assets. Count II seeks restitution and other equitable relief under ERISA Section 502(a)(2), 29 U.S.C. § 1 132(a)(2). Count III alleges Woods used Plan assets for his personal purposes and thus, violated ERISA Section 406, 29 U.S.C. § 1106. Count III seeks restitution under Section 502(a)(3).
The fact that Woods' response was stricken does not automatically entitle Plaintiffs to summary judgment. Tobey v. Extel-JWP, Inc., 985 F.2d 330, 332 (7th Cir. 1993) (stating "[n]owhere in Rule 56 is the granting of summary judgment authorized as a sanction for failing to file a timely response to a motion for summary judgment."). Rather, if the adverse party does not respond to a summary judgment motion with documentary evidence complying with Rule 56, "summary judgment, if appropriate, shall be entered against the adverse party." Fed.R.Civ.P. 56(e).
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 the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). A genuine issue of material fact exists for trial when, in viewing the record and all reasonable inferences drawn from it in a light most favorable to the non-moving party, a reasonable jury could return a verdict for the non-movant. Anderson v. Liberty Lobby Inc., 477 U.S. 242, 248 (1986). Accordingly, the Court considers whether drawing all reasonable inferences in view of the undisputed record in a light most favorable to Woods, Plaintiffs are entitled to judgment as a matter of law.
A. Count I
Plaintiffs first argue that Woods received disability benefits in violation of the terms of the Plan, thus entitling the Plan to restitution. The Court must initially determine the appropriate standard of review. In Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989), the Court held, consistent with trust principles, that "a denial of benefits challenge under § 1132(a)(1)(B) 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." If such discretion is given, the "arbitrary and capricious" standard of review applies. Id. at 111. Here, Count I is not a denial of benefits claim brought pursuant to § 1132(a)(1)(B) but rather seeks restitution pursuant to § 1132(a)(3). Neither the Supreme Court nor the Seventh Circuit has expressly addressed the appropriate standard of review for § 1132(a)(3) claims. Firestone, 489 U.S. at 108 (stating "[t]he discussion which follows is limited to the appropriate standard of review in § 1132(a)(1)(B) actions challenging denial of benefits based on plan interpretations. We express no view as to the appropriate standard of review for actions under other remedial provisions of ERISA."); Ramsey v. Hercules Inc., 77 F.3d 199, 204 (7th Cir. 1996). Although this is not an action by a participant or beneficiary to recover benefits under § 1132(a)(1)(B), the Court believes the same standard should apply because, like a denial of benefits claim, Count I involves a determination of benefits eligibility based on an interpretation of the Plan.
Section 1132(a)(3) of ERISA expressly provides that a fiduciary may seek "appropriate equitable relief' to enforce the terms of a plan. 29 U.S.C. § 1132 (a)(3). "Appropriate equitable relief' includes restitution. Mertens v. Hewitt Assoc., 508 U.S. 248, 255 (1993); see also Harris Trust Savings Bank v. Provident Life Accident Ins. Co., 57 F.3d 608, 615 (7th Cir. 1995) (allowing `appropriate equitable relief' in the form of restitution where recipient was not entitled to benefits under the plan terms).
In the present case, the Plan states that the plan administrator has the "discretionary authority to determine Eligibility for Plan benefits and to construe the terms of the Plan, including the making of factual determinations." This language grants the plan administrator with discretion to determine participants' eligibility for benefits. Therefore, the Plaintiffs' decision will be reviewed only to determine whether it was made in an arbitrary and capricious manner.
"A decision is arbitrary or capricious only when the decision maker "has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence. . . ., or is so implausible that it could not be ascribed to difference in view or the product of . . . expertise.'" Trombetta v. Cragin Federal Bank for Savinas Employee Stock Ownership Plan, 102 F.3d 1435, 1438 (7th Cir. 1997). A plan administrator's decision is not arbitrary or capricious "if it is possible to offer a reasoned explanation, based on the evidence, for that decision." Id. at 1438. Woods must show that the plan administrator's decision was "downright unreasonable." Chojnacki v. Georgia-Pacific Corp., 108 F.3d 810, 816 (7th Cir. 1997). Under the arbitrary and capricious standard, the Court must resolve questions of judgment in favor of the plan administrator. Patterson v. Caterpillar, 70 F.3d 503, 505 (7th Cir. 1995).
The Plan here provides that an employee is eligible to receive loss of time disability benefits if the employee is "totally disabled" during the time period for which the benefits are claimed. Plaintiffs' Local 12(M) Statement ¶ S. The Plan defines "totally disabled" as "[a] period of disability during which a covered Employee . . . is physically unable to perform any and every duty of his occupation at the time such disability commenced. . . ." Id. ¶ 6. This case turns on the meaning of the term "occupation" and whether Woods performance of his duties as president of the Union constituted his "occupation."
For most Plan participants, their jobs as longshoremen constitute their occupations. But the Plan does not define "occupation, " and nothing in the Plan provides that work as a union officer may not be considered a participant's "occupation." In fact, certain provisions in the Plan's definitions section suggest that holding a union office may be considered an occupation. For example, the Plan's definition of the term "Employee" includes any person employed by the Union. Likewise, for the purpose of providing benefits, the term "Employer" also means the Union. Moreover, the term "occupation" in the ordinary and popular sense may include work as a union officer. Wahlin Sears, Roebuck Co., 78 F.3d 1232, 1235 (7th Cir. 1996) (holding federal common law rules of contract interpretation, which apply to disputes concerning benefits under ERISA plans, direct the courts to "interpret ERISA plans in an ordinary and popular sense as would a person of average intelligence and experience."). Black's Law Dictionary defines "occupation" as follows:
That which principally takes up one's time, thought, and energies, especially, one's regular business or employment; also, whatever one follows as the means of making a livelihood. Particular business, profession, trade, or calling which engages individual's time and efforts; employment in which one regularly engages or vocation of his life.
Black's Law Dictionary 1079 (6th ed. 1990). Given the undisputed facts of this case, the Court cannot find that the plan administrator's determination that Woods' work as president of the Union was his "occupation" is arbitrary and capricious.
During 1992, Woods was employed by the Crese Company as a longshoreman for approximately ten to twenty hours per week. Woods' Dep., pp. 15-17. Woods was also president of the Union in 1992. Between May 6, 1992 and August 16, 1992, Woods spent a substantial amount of his time on union business for which he was at least minimally compensated. His duties included holding meetings with the executive board and with union members, meeting with others concerning the collective bargaining agreement or safety, and reviewing the financial records of Local 19. Woods testified that as president of the Union, he was "always on call," working on average eight to ten hours a day, Monday through Saturday. The plan administrator's interpretation of the term "occupation" as including Woods' employment as president of the Union was not "downright unreasonable."
In 1993, Woods worked only as the president of the union and was not employed by any other entity. Woods' Dep., p. 16. On the Statement of Claim form Woods completed on October 5, 1993, he listed his employer as the union. Thus, the plan administrator's determination that Woods' occupation was union president and that he was able to perform his duties as union president at the times his disabilities commenced was reasonable as to his 1993 claim for benefits.
B. Counts II III
Plaintiffs next argue that Woods breached his fiduciary duty when he misrepresented his disability status in order to obtain Plan assets. "It goes without saying that a claim for breach of fiduciary duty lies only against an individual or entity that qualifies as an ERISA "fiduciary."'Schmidt v. Sheet Metal Workers' National Pension Fund, 128 F.3d 541, 547 (7th Cir. 1997). ERISA defines a fiduciary as a person who "exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets" or "has any discretionary authority or discretionary responsibility in the administration of such plan." 29 U.S.C. § 1002 (21)(A). Plaintiffs point out that Woods was a trustee of the Fund and a fiduciary of the Plan during the periods of time at issue here. But a "person deemed to be a fiduciary is not a fiduciary for every purpose but only to the extent that he performs one of the described functions." Klosterman v. Western General Management, Inc., 32 F.3d 1119, 1122 (7th Cir. 1994).
In the present record, there is no evidence indicating that Woods was acting as a fiduciary when he filed claims for loss of time benefits. Woods' decision to file for loss of time benefits was not an exercise of discretion in the management of the Plan, management or disposition of its assets, or in the administration of the Plan. Although the eligibility determination regarding Woods' claims affected the disposition of Plan assets, no evidence has been submitted indicating that Woods had any responsibility for determining his own eligibility for loss of time benefits. When Woods filed his claim for benefits he was acting as a participant and entitled to act in his own interest. Because Woods was not acting as a fiduciary when he filed his claims for benefits, he did not violate his fiduciary duty under ERISA by allegedly misrepresenting his disability status. Plaintiffs' motion for summary judgment as to Count II is denied. Because Plaintiffs' motion for summary judgment on Count III also depends on a finding that Woods acted as a fiduciary, summary judgment on Count III is denied.
C. Request for Relief
Plaintiffs seek summary judgment on the relief sought in their complaint. Plaintiffs seek relief in the form of restitution, prejudgment interest, costs, and attorney's fees. Additionally, Plaintiffs urge the Court to enjoin Woods from serving as a fiduciary in any plan sponsored by the International Longshoremen's Association.
A fiduciary may only seek equitable relief under ERISA § 502(a)(3). Wal-Mart Stores, Inc. Associates' Health and Welfare Plan v. Wells, 213 F.3d 398, 400 (7th Cir. 2000). Restitution is one type of equitable relief contemplated by § 502(a)(3) of ERISA.Administrative Committee v. Gauf, 188 F.3d 767, 770-71 (7th Cir. 1999). Plaintiffs seek equitable relief against Woods under a reimbursement clause and to ensure his compliance with the terms of the Plan. Gauf, 188 F.3d at 770-71. With respect to Count I, the complaint seeks a "judgment in equity be ordered in favor of the Fund and that Defendant be ordered to make full restitution to the Fund of all benefits wrongly paid to him." Plaintiffs are entitled to restitution in the amount of $2,399.99 ($2,699.99 of loss of time benefits paid to Woods less the $300 he paid back to the Fund). The Court declines to decide whether Plaintiffs are entitled to prejudgment interest, attorney's fees, and injunctive relief until final resolution of the remaining counts of the complaint.
III. CONCLUSION
For the reasons explained above, Plaintiffs Motion for Summary Judgment on Liability and Relief is GRANTED IN PART and DENIED IN PART. This case is set for a status hearing on August 10, 2000 at 10:00 a.m.
ENTER: