Opinion
97 Civ. 99 (MGC).
July 31, 2000.
DONNA T. POCHODAY, Chatham, NJ, Attorney for plaintiff.
RAAB STURM, LLP, New York, NY, Attorneys for Defendants.
By: Michael Geffner, Esq.
OPINION
Plaintiff John Pochoday sues under the Employment Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132 (a) (1)(B) 1053(a), to recover pension benefits he alleges were improperly denied. Specifically, Pochoday argues that because he worked for two separate employers as a member of two separate unions, he is entitled to two separate pensions. Defendants argue that because both of Pochoday's employers contributed to the same multi employer pension fund, and because the rules of that fund limit the amount of service credit an employee can accumulate in a given quarter regardless of how many hours he actually works, Pochoday is entitled to only one pension. The parties have agreed that this case will be tried on the papers submitted. For the reasons discussed below, Pochoday is not entitled to a second pension, and the Clerk is directed to enter judgment for defendants.
UNDISPUTED FACTS
The material facts are not in dispute.
From April 1967 through June 30, 1995, Pochoday was a fulltime day employee of CHH Realty and its predecessors in interest at 106-110 Lafayette Street, New York, New York ("110 Lafayette"). During this period, Pochoday worked without a break in service. At all times during Pochoday's employment with 110 Lafayette, he was a member in good standing of Local 32B-J, Services Employees International Union, AFL-CIO ("Local 32B-J").
During nearly the same period, from 1965 through June 30, 1995, Pochoday was also a full-time night employee of ABM and its predecessors in interest at 120 Broadway, New York, New York ("120 Broadway") with no break in service. At all times during Pochoday's employment with 120 Broadway, he was a member in good standing of Local 670, Building Service Union, AFL-CIO ("Local 670").
Local 32B-J and Local 670 are separate unions. Local 32B-J was the exclusive collective bargaining representative for the service employees of 110 Lafayette, and Local 670 was the exclusive bargaining representative for the service employees of 120 Broadway. During Pochoday's years of concurrent membership in these two unions, he never alternated service between 110 Lafayette and 120 Broadway and he never worked only part-time for either employer.
Local 670 negotiated a collective bargaining agreement with 120 Broadway, and Local 32B-J negotiated a collective bargaining agreement with 110 Lafayette, that provided for pension contributions to the Building Service 32B-J Pension Fund (the "32B-J Fund"). In accordance with the agreements, all contributions were made by employers. None were made by employees. The 32B-J Fund is a consolidated multi-employer benefit trust fund created by an agreement dated January 25, 1978.
Until 1994, Pochoday believed that separate pension contributions were being made to separate pension funds by each of his two employers because he was working for two different employers at two different buildings and paid dues to two separate unions. This belief was based in part on erroneous statements by Local 670 shop stewards at 120 Broadway that he would be entitled upon his retirement to receive separate pensions from each of his two jobs. When Pochoday asked Kevin Duffy, the 32B-J Fund claims manager, and certain "front-desk women" at the Local 32B-J main office about the pension benefits he would receive upon his retirement, he was informed that he would receive whatever pension benefits were due him and that they "knew nothing about Local 670."
In 1994, Pochoday was informed for the first time by the Local 670 Pension Fund that all of the pension contributions by his employer at 120 Broadway had been made to the 32B-J Fund on Pochoday's behalf, not to any separate fund established by Local 670.
Pochoday retired from all employment as of July 1, 1995 and applied for pension benefits. The 32B-J Fund granted Pochoday a single pension of $650 per month. According to the 32B-J Fund, Pochoday was entitled to one full pension because he had more than 294 months of continuous service credits and had reached the age of 65 by October 20, 1994. However, the fund refused to pay Pochoday a second pension. The stated basis for the denial of additional pension benefits was a provision of the 32B-J Fund Plan (the "Plan") that "[n]o employee shall accumulate more than an aggregate of three months Service Credit during any calendar quarter." The $650 monthly pension payment is the same pension payment that Pochoday would have received if he had worked fulltime for only one of his two employers.
Pochoday appealed the 32B-J Fund's determination that he was entitled to only one pension. In a December 5, 1995 letter, Arthur Benevenuto, the fund manager for the 32B-J Fund, informed Pochoday that his appeal was denied and that under the 32B-J Fund's rules only one pension payment could be approved. Without success, Pochoday exhausted all available union procedures in an attempt to obtain additional pension benefits.
A number of other employees who held two full-time jobs and were employed by two different employers that contributed to the 32B-J Fund receive only one pension from the 32B-J Fund. It is unclear, however, whether any of these employees were, at the time of their employment, members of a union other than Local 32B-J, although it is known that at least some of these employees were members of only Local 32B-J and no other union.
Pochoday initially filed a claim in small claims court against Local 32B-J. Local 32B-J removed the action to this court. Pochoday then joined the 32B-J Fund and its trustees and administrators as additional defendants, along with the Local 670 Pension Fund. Local 32B-J and the Local 670 Pension Fund were later dismissed, leaving only the present defendants in the action.
DISCUSSION
I. Standard of Review
The first question to be resolved is whether the 32B-J Fund's refusal to grant plaintiff a second pension should be reviewed de novo or under an "arbitrary and capricious" standard. An arbitrary and capricious standard of review is appropriate "[w]hen an employee benefit plan grants a plan fiduciary discretionary authority to construe the terms of the plan."Miller v. United Welfare Fund, 72 F.3d 1066, 1070 (2d Cir. 1995);see also Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 956-57, 103 L.Ed.2d 80 (1989); Rombach v. Nestle USA. Inc., 211 F.3d 190, 194 (2d Cir. 2000); Kinstler v. First Reliance Standard Life Ins. Co., 181 F.3d 243, 251-52 (2d Cir. 1999).
In this case, the language of the Plan grants the Plan's trustees discretionary authority to construe its terms. Section 7.07 provides that "[t]he Trustees shall, subject to the requirements of the law, judge of the standard of proof required in any case and the application and interpretation of this Plan, and decisions of the Trustees shall be final and binding on all parties." Section 7.08 describes the right to appeal denials of benefits and provides that "[t]he appeal shall be considered by a person or committee designated by the Trustees, or all of the Trustees, at the sole discretion of the Trustees." Moreover, the Agreement and Declaration of Trust, the instrument that created the Plan, provides that "[i]n the event that any disputed matter shall arise under the Plan, the decision of the Trustees upon such matter shall be binding and conclusive upon all parties and persons."
These provisions show that the 32B-J Fund has vested its trustees with exclusive discretion to interpret the Plan and make benefit determinations. Accordingly, defendants' denial of Pochoday's benefit request must be accorded deference and will be set aside only if it was "without reason, unsupported by substantial evidence, or erroneous as a matter of law." Pagan v. NYNEX Pension Plan, 52 F.3d 438, 442 (2d Cir. 1995) (quoting Abnathya v. Hoffman-La Roche Inc., 2 F.3d 40, 45 (3d Cir. 1993)).See also Miles v. New York State Teamsters Conference, 698 F.2d 593, 599 (2d Cir. 1983) (explaining that plan trustees act arbitrarily and capriciously when they "impose a standard not required by the plan's provisions, or interpret the plan in a manner inconsistent with its plain words, or by their interpretation render some provisions of the plan superfluous");Zuckerbrod v. Phoenix Mutual Life Ins. Co., 78 F.3d 46, 49 (2d Cir. 1996) (explaining that the arbitrary and capricious standard requires consideration of "whether [the defendant's] decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment") (quotation marks and citation omitted); Beam v. Int'l Org. of Masters, Mates, and Pilots, 511 F.2d 975, 980 (2d Cir. 1975) (requiring that benefits decisions be neither arbitrary, capricious, nor "motivated by bad faith").
II. Was the Denial of a Second Pension Arbitrary and Capricious?
Pochoday claims that because he satisfied the relevant service requirements for two separate employers as a member of two separate unions, he is entitled to two separate pensions. Defendants contend that the plan expressly prohibits such a result, or at least does not require it.
The relevant portion of the Plan is Section 5.05, entitled "No Duplication of Service Credits," which provides that "[n]o Employee shall accumulate more than an aggregate of three months Service Credit during any calendar quarter." There is no dispute that Pochoday was credited with the maximum three months of service credit for every calendar quarter during which he worked. Nor is there any dispute that he is receiving the maximum pension payment available under the Plan. Pochoday's argument, however, is that during his years of service with 120 Broadway and 110 Lafayette he was, in effect, two separate employees earning two separate pensions. Thus, he argues, Section 5.05 is irrelevant because he does not claim more than three months of service credit for any calendar quarter for either of his jobs individually.
Defendants respond that the very purpose of Section 5.05 is to limit accumulation of service credits for employees in situations like Pochoday's. They point out that under the terms of the Plan, a participant cannot accumulate more than three months of service credit other than by performing more than one full-time job. Indeed, it is undisputed that numerous other participants in the 32B-J Fund who held two full-time jobs received only one pension because of the Plan's limitation on accumulation of service credits, even though either of their jobs would have entitled them to full-time pensions. Defendants' interpretation of the Plan is thus not arbitrary and capricious. In fact, the Plan's language is so unambiguous that defendants' decision to deny benefits would survive even de novo review.
Pochoday does not contend that he did not receive a plan summary. Rather, he argues that he was nonetheless misled into believing that he would receive two pensions upon retirement. He was told by Local 670 shop stewards at 120 Broadway that he would receive two pensions when he retired. These misrepresentations, Pochoday contends, prohibit defendants from asserting a contrary interpretation of the Plan after he relied on those representations to his detriment.
This Circuit has recognized that under "extraordinary circumstances" a benefit fund may be equitably estopped from denying a claimant's eligibility. Chambless v. Masters, Mates Pilots Pension Plan, 772 F.2d 1032, 1041 (2d Cir. 1985) ("The actuarial soundness of pension funds is, absent extraordinary circumstances, too important to permit trustees to obligate the fund to pay pensions to persons not entitled to them under the express terms of the pension plan."); Lee v. Burkhart, 991 F.2d 1004, 1008 (2d Cir. 1993). However, there are no such circumstances in this case. First, none of the representations upon which Pochoday claims to have relied were made by defendants or their agents. The statements by the Local 670 shop stewards can at best be imputed only to Local 670, not defendants. Pochoday makes no claim that defendants ever misled him into believing that he would receive two pensions. Pochoday spoke to employees in defendants' offices at unidentified times, but concedes that he was told that he would receive whatever he was eligible for and that no one mentioned a second pension. There is thus no basis for holding defendants responsible for any erroneous advice that Pochoday received about his pension benefits. See Chambless v. Masters, Mates Pilots Pension Plan, 571 F. Supp. 1430, 1452 (S.D.N.Y. 1983) ("[O]nly the trustees — and not the union — are authorized to obligate the plan.").
Pochoday also argues that the Local 670 collective bargaining agreement is misleading because it refers to the "Building Service Pension Fund" rather than the full name "Building Service 32B-J Pension Fund." He contends that this description of the fund makes it impossible to tell that an employee with Local 670 is a participant in the 32B-J Fund. This argument lacks merit. First, as discussed above, defendants cannot be held responsible for a drafting error in Local 670's collective bargaining agreement. Second, Pochoday does not claim to have relied on this alleged error to his detriment; indeed, he admits that he never read the collective bargaining agreement. Finally, the description is not particularly misleading. The contract provision at issue refers to the "presently existing" Building Service Pension Fund. Since there was no other "presently existing" pension fund for 120 Broadway, it is difficult to understand how this provision could be read to suggest that Local 670 employees participated in a fund other than the 32B-J Fund.
Pochoday's equitable estoppel claims also fail because he has not proffered evidence that he relied to his detriment on the alleged erroneous representations. Pochoday alleges that if he had known earlier that he would receive only one pension for working in two jobs, he would have found employment elsewhere and earned a second pension. However, there is no evidence that Pochoday could have obtained a job with an employer that made contributions to a pension fund other than the 32B-J Fund. Pochoday asserts that he could have obtained a job covered by a collective bargaining agreement with an electricians' union, but provides no proof concerning the availability of such jobs or whether he was qualified for them. Moreover, Pochoday received wages, health, disability, and other benefits during his years with each of his employers. There is no evidence that he would have received a comparable package with another employer. Thus, even if Pochoday was misled, he has not shown that his reliance was detrimental to him.
Defendants' refusal to provide Pochoday with additional pension benefits was not arbitrary and capricious, and Pochoday has not shown any equitable reason to override defendants' decision. Accordingly, Pochoday has not proven that his rights under ERISA were violated.
CONCLUSION
For the foregoing reasons, judgment is entered for defendants and against plaintiff.
SO ORDERED.