Opinion
Civil Action No. 04-1139 Section "C" (5).
March 7, 2005
ORDER AND REASONS
Before the Court is Defendants New Orleans Employer-International Longshoremen's Association, AFL-CIO Pension, Welfare, and Vacation and Holiday Funds' (collectively "the Funds") Motion for Summary Judgment. For the following reasons, the motion is GRANTED.
In a telephone status conference held Feb. 2, 2005, the parties agreed that the opposition to the Funds' Motion for Summary Judgment would be treated as a Cross-Motion, and the case would be resolved on the briefs.
The Funds were jointly established in 1957 by employers which employed and the labor unions which represented individuals working in the Longshore Industry in the New Orleans and Baton Rouge area. A joint trust agreement authorized the Trustees to oversee the Funds and provide pension, health insurance, vacation and holiday benefits. Such benefits, including a pension plan, were established. The trust agreement explicitly provides that the Plan is administered by the Board, which is vested with the discretionary authority to construe the terms of the pension plan and also the authority to delegate administrative authority. (Rec. doc. 14, p. 2 and Exhibit 2: 2002 Pension Plan at Section 9.2).
Rosario Centanni was employed in the Longshore Industry in the Port of New Orleans from 1948 to 1989. He applied for, and was granted, his retirement benefits from the Pension Plan effective March 1, 1989. On that date, Centanni received a letter notifying him that his application was granted and the amount of his pension would be $1,523 per month based on 42 years at 2426 average hours per year in the industry. (Rec. doc. 14, ex. 3). The letter also stated:
If at any time after the date of retirement you desire to return to work in the Industry you must notify the Board of Trustees . . . so advising and Pension benefits will cease for as long as you continue to work in the Longshore Industry, provided that in no event shall Pension payments be resumed earlier than sixty calender days after cessation of the same. Thereafter, upon such application as the Board may prescribe, your right to resume Retirement or Early Retirement Pension Payments shall recommence. These provisions apply each time you return to work in the Longshore Industry.
(Id.). Centanni would become re-employed in the Industry. On or about March 1, 2003, Centanni began work as a hiring dispatcher for Clerks and Checkers Union, ILA Local 1497 ("Local 1497"). However, notwithstanding the restriction in the March 1, 1989 letter, Centanni's pension was not suspended despite his re-employment because he was over the age of 70½ when he took the job. Article 6.3(j) of the 2002 Amendments and Restatements to the Plan ("2002 Plan") provides that "There shall be no suspension of benefits with respect to the payment of benefits under the Plan that are due on or after the date the Qualified Pensioner attains the age of 70½." (Rec. doc. 14, Ex. 2, p. 44). Centanni was employed by Local 1497 until September 30, 2003. He worked 1036 hours during the approximately seven months he was employed. (Rec. doc. 14, p. 4).
In August, 2003, while still employed at Local 1497, Thomas R. Daniel, the Funds's Administrator, was contacted and asked to calculate Centanni's new monthly pension benefit based on the additional hours worked. (Id.). Daniel concluded that Centanni was entitled to an additional $74 per month. (Id.). After learning of Daniel's calculation, Centanni responded by letter dated August 27, 2003 that he did not accept Daniel's calculation. (Id., ex. 4). Rather, Centanni felt his pension should be calculated as though he were retiring for the first time; the "calculation of the benefit (should be made) without regard to the `initial' retirement — that is, the Plan (should treat) individuals as if they were first-time retirees." (Rec. doc. 17, p. 2-3). According to the Funds, such a calculation would increase his monthly pension benefit from $1,756 per month to $3,182 per month. (Rec. doc. 14, p. 5; Daniel Affidavit ¶ 18).
Both parties evidently agree that Centanni's pension was $1,756 per month in 2003. The Court assumes that Centanni's pension increased from the $1,523 per month indicated in the March 1, 1989 letter due to the Board of Trustees' periodic decisions to increase pension benefits.
Centanni's pension was subsequently increased $74 per month. Daniel informed Centanni that he could accept this increased amount without waiving his right to claim that he was entitled to more. (Rec. doc. 14, p. 5; Daniel Affidavit ¶ 17). On October 27, 2003, Centanni's attorney appeared before the Board of Trustees to request that Centanni's benefit be recalculated in the manner Centanni desired. The Trustees did not grant his request. Centanni believed the denial to be arbitrary in light of past practice, and subsequently filed the instant lawsuit.
Centanni has cited two previous instances of people "who had returned to work in the Longshore Industry subsequent to retiring and who, after having ended the work to which they had returned, had their retirement benefit increased substantially" in the same way that Centanni desires. (Rec. doc. 17. p. 2). James McCleland, Jr., a co-chair of the Funds' Board of Trustees and a member of the Board for over two decades, acknowledges that these two people, John Goslee and Henry Robertson, had their pensions recalculated as though they were retiring for the first time. (Id. at p. 3). Goslee retired September 1986, returned to work in April 1988, ceased re-employment in September 1988 and was assigned a new Annuity starting date of October 1, 1988. Robertson retired on May 1, 1990, returned to work later in 1990, ceased re-employment in 1996 and was assigned a new annuity starting date of July 1, 1996. (Rec. doc. 19, p. 4).
The Court notes that the Plan once provided for a 25-year pension, regardless of how many years the employee had worked. McCleland depo, p. 13. In other words, years of service beyond 25 years were not included in the pension calculation. James McCleland testified in his deposition that both John Goslee and Henry Robertson likely retired for the first time subject to the 25-year limit. (Id. at pp. 33-34.). Thus, when they "re-retired" after the 25-year limit was lifted, their pensions were recalculated to receive the full benefit of all of their years of service. The Court further notes that Centanni was never subject to the 25-year limit.
Standard of Review for Summary Judgment
A district court can grant a motion for summary judgment only when 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.'" Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986) (quoting Fed.R.Civ.P. 56(c)). When considering a motion for summary judgment, the district court "will review the facts drawing all inferences most favorable to the party opposing the motion." Reid v. State Farm Mut. Auto Ins. Co., 784 F.2d 577, 578 (5th Cir. 1986). The court must find that a reasonable jury could return a verdict for the nonmoving party . . . [and a] fact . . . [to be] `material' if it might affect the outcome of the suit under the governing substantive law." Beck v. Somerset Techs., Inc., 882 F.2d 993, 996 (5th Cir. 1989) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986)). "If the moving party meets the initial burden of showing that there is no genuine issue of material fact, the burden shifts to the non-moving party to produce evidence or designate specific facts showing the existence of a genuine issue for trial." Engstrom v. First Nat'l Bank of Eagle Lake, 47 F.3d 1459, 1462 (5th Cir. 1995) (citing Celotex, 477 U.S. at 322-24, 104 S.Ct. at 2552-53, 91 L.Ed.2d 265 and Fed.R.Civ.P. 56(e)). The mere argued existence of a factual dispute will not defeat an otherwise properly supported motion. See Anderson, 477 U.S. at 248, 106 S.Ct. at 2510, 91 L.Ed.2d 202. "If the evidence is merely colorable, or it is significantly probative, `summary judgement is not appropriate.'" Id., at 249-50, 106 S.Ct. at 2511, 91 L.Ed.2d 202 (citations omitted).
Standard of Review of the Pension Funds's Decision
As the Funds point out, the Pension Plan is an employee pension benefit plan within the meaning of § 3(2) of the Employees Retirement Income Security Act of 1974 (ERISA), as amended, 29 U.S.C. § 1002(s). Under ERISA, when trust administrators are provided with discretion "to construe the terms of the plan," as the Funds's administrators are, these interpretations are reviewed under an "abuse of discretion" standard. Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989); Worthy v. NOSSA-ILA Pension Fund, 342 F.3d 422 (5th Cir. 2003).
In Worthy, a case against the very Funds involved in the instant matter (NOSSA-ILA Pension Fund is the Funds's former name), the Fifth Circuit set out the standard for determining an abuse of the administrator's discretionary authority to construe the terms of the plan. First, the reviewing court is to identify the legally correct interpretation of the plan. Worthy, 342 F.3d at 428. If the administrator has interpreted the plan correctly, then the review ends. If the court finds that the plan administrator failed to provide a "legally correct" interpretation, then the court goes on to determine whether the administrator's interpretation constitutes an abuse of discretion. Id.
To determine whether the interpretation of the plan is "legally correct," the court considers "1) whether the administrator has given the plan a uniform construction; 2) whether the interpretation is consistent with a fair reading of the plan; and 3) whether any unanticipated costs result from different interpretations of the plan." Id.
Should the reviewing court need to determine whether there was an abuse of discretion, the court considers 1) the internal consistency of the plan under the administrator's interpretation; 2) any relevant regulations formulated by the appropriate administrative agencies; and 3) the factual background of the determination and any inferences of lack of good faith. Batchelor v. International Brotherhood of Electrical Workers Local 861 Pension Retirement Fund, 877 F.2d 441, 445-48 (5th Cir. 1989).
The Plan Language
The Plan was amended and restated on September 13, 2002. The restatement added a new section, 6.3(e). Section 6.3 reads in pertinent part:
The suspension of benefit rules described in this Section 6.3 shall apply to all Pension Benefits other than Disability Pensions. A Qualified Pensioner receiving a Pension Benefit may take employment after retirement without suspension of benefits except as follows:
(e) "Suspension of Benefits" for a month means non-entitlement to benefits for the month . . . The amount of the monthly benefit on resumption shall be the same amount that the Qualified Pensioner was receiving at the time of suspension, plus any increase required to reflect an additional accrual of benefits attributable to resumed Employment in the Industry; however, there shall be no new Annuity Starting Date. (Emphasis added).
(j) There shall be no suspension of benefits with respect to the payment of benefits under the Plan that are due on or after the date the Qualified Pensioner attains age 70½.
Both parties acknowledge that Section 6.3(e) was added to prevent future occurrences of retirees going back to work and then, upon leaving their re-employment, recalculating their pension as though they were retiring for the first time. (Rec. doc. 14, p. 8; Daniel depo. p. 16-17, 19). In other words, Section 6.3(e) was added to prevent Goslee and Robertson's situations from happening again. Daniel, in his deposition, confirmed that "but for Section 6.3(e), Centanni would be entitled to have his pension recalculated in the same manner as the pensions of Goslee and Henry Robinson were recalculated." (Id. p. 20). The question, therefore, is whether the Funds's Administrator, Thomas Daniel, is correct in his interpretation that Section 6.3(e) applies to Centanni, thereby not allowing a new Annuity Starting Date, or whether this interpretation is an abuse of discretion.
The Court finds that the references to "Henry Robinson" in the deposition are mistaken and meant to identify Henry Robertson.
Section 6.3(e) read with 6.3(j)
Centanni argues that Section 6.3(e) is not applicable because it applies only to those Plan Participants who suffer a "suspension of benefits." (Rec. doc. 17, p. 4). Pursuant to Section 6.3(j), "there shall be no suspension of benefits with respect to the payment of benefits under the Plan that are due on or after the date the Qualified Pensioner attains age 70½." Centanni was over the age of 70½ at the time of his re-entry into employment in the Industry. Accordingly, his pension was not suspended during his re-employment in the Industry. Therefore, Centanni argues, 6.3(e) is not applicable.
The Court finds that it is legally correct to interpret 6.3(e) as applying to Centanni, despite the fact that he is not susceptible to a suspension of benefits. The first Worthy factor — whether Daniel has given the plan a uniform construction — is not particularly insightful because it appears from the briefs of both parties that Centanni is the first Qualified Pensioner over the age of 70½ to become re-employed in the Industry. As such, the Funds have not previously had occasion to interpret Section 6.3(e) of the 2002 Plan in light of Section 6.3(j). Centanni argues that prior Plan constructions have permitted new Annuity Starting Dates, as in the cases of Goslee and Robertson, and therefore Daniel is now deviating from past interpretations. However, the Court finds that Daniel's current construction of the Plan is not simply an arbitrary deviation from previous interpretations, but rather a reasonable incorporation of Section 6.3(e).
The second Worthy factor — whether the interpretation is consistent with a fair reading of the plan — favors Daniel and the Funds. Centanni's reading of Section 6.3(e) in light of 6.3(f) violates the intent behind the language of 6.3(e). The Funds added 6.3(e), with its explicit "no new Annuity Starting Date" language, to prevent the type of pension calculation that Centanni seeks. Adherence to Centanni's interpretation would constitute nothing more than a loophole in the Plan language. It does not seem fair to say that if Centanni were 70 years old when he took the job, he would be entitled to only an extra $74 per month, but because he was at least 70½ years old when he took the job he is instead entitled to an extra $1,300 per month for the same work. Section 6.3(j) benefits Qualified Pensioners over the age of 70½ by not suspending their pay under any circumstances. Centanni implicitly argues that Section 6.3(e) should be read in such a manner that it expands the scope of 6.3(j) to not only give Qualified Pensioners over 70½ protection against any suspension of benefits, but also give them the added benefit of receiving a new Annuity Starting Date in the event the Pensioner becomes re-employed in the Industry. As can be seen in the case of Centanni, who would nearly double his pension after seven months work, this added benefit could be a windfall. The Court finds that neither the plain language of the Plan nor the intent of the Board requires or warrants such a reading.
The third Worthy factor — whether any unanticipated costs result from the different interpretations of the plan also supports Daniel's interpretation of the Plan. Centanni's interpretation would result in significant increases in pension payments for Qualified Pensioners who become re-employed in the Industry when over the age of 70½, despite an amendment to the Plan intended to prevent such occurrences. The Court finds that the Funds did not anticipate this scenario. Accordingly, the factors favor the conclusion that Daniel's interpretation of the Plan is legally correct. Thus, the Court does not reach the second inquiry, whether the interpretation is an abuse of discretion.
Effective Date of Section 6.3(e)
Centanni also argues that Section 6.3(e) is not applicable to him because it "is inapplicable to Plan Participants retiring prior to October 1, 1997." (Rec. doc. 17, p. 5). As support for this proposition, Centanni cites the Preamble to the 2002 Plan. It reads:
The rights and benefits, if any, of an Employee who terminates Employment in the Industry prior to October 1, 1997, shall, except as otherwise required by applicable law or as otherwise specifically provided herein, be determined in accordance with the provisions of the Plan in effect on the date his Employment in the Industry terminated.
(Rec. doc. 14, ex. 2; Preamble, 2002 Pension Plan, pg. 1). Centanni argues that his "first" retirement, in 1989, was prior to October 1, 1997, and therefore his pension should be calculated in accordance with the Plan as it existed at that time, when it did not include Section 6.3(e).
Daniel, by contrast, interprets this section of the Preamble as referring to terminated vested participants, rather than retired persons such as Centanni. (Daniel depo. p. 13). The portion of the transcript reads:
Daniel — My understanding is this last sentence (of the Preamble) pertains to terminated vested participants who left the industry prior to October 1, 1997. And you would have to consult those previous plan documents in order to determine what their benefit level was at the time they left the industry.
Question — Is that or is that not Mr. Centanni? Does he not fall into that category? He is a terminated vested, isn't he?
Daniel — Mr. Centanni is retired.
Question — How does that differ from a terminated vested?
Daniel — Terminated vested have not retired. They left the industry and are considered inactive.
Question — But the words . . .
Daniel — They refer to an employee who terminated in the industry.
Question — Wasn't he an employee who terminated employment prior to October 1997?
Daniel — That's correct.
Question — Okay. So tell me again why that sentence doesn't apply to him?
Daniel — Because he is retired.
(Id.). A terminated vested employee is an Inactive Employee, which is defined in the 2002 Plan as "an Employee who is not an Active Employee." (2002 Plan, p. 7, Section 1.24). A retired person is a "Qualified Pensioner," defined as "any person receiving a pension under the Plan or any person whose application for a pension has been approved by the Board. The status of a Qualified Pensioner shall be considered effective from his Approved Retirement Date." (Id. p. 8, Section 1.33).
As previously noted, Daniel is the Plan administrator and has discretion to interpret the language of the Plan. The Court reviews Daniel's interpretation using the Worthy factors to determine if it is legally correct. With respect to the first factor, the parties provide no examples of the ways in which the Preamble to the 2002 Plan has been previously interpreted, so the Court cannot determine whether Daniels' assertion that the Preamble refers to terminated vested employees is a uniform construction. With respect to the second factor, the Court finds Daniel's interpretation to be a fair reading of the Plan because the Plan utilizes precise terms throughout. As far as the Plan is concerned, a "Qualified Pensioner" is not the same as an "Employee," whether active or inactive. If the Preamble were meant to apply to retired persons, it would be reasonable to conclude that it would have made mention of "Qualified Pensioners." Furthermore, if the Preamble were meant to affect retired persons as well as active or inactive "Employees," it would conflict with the plain meaning and intent of Section 6.3(e) by limiting its application to Qualified Pensioners who retired after October 1, 1997. That is to say, the wording of the provision and the expressed intent of the Board indicate that Section 6.3(e) was meant to prevent pension calculations using new Annuity Starting dates for all Pensioners who became re-employed in the Industry, and not just those who first retired after an arbitrary date. Similarly, and also with respect to the third Worthy factor, the Court finds that Centanni's interpretation would result in unanticipated costs to the Funds because it would mean that anyone in the Industry who retired prior October 1, 1997 could become re-employed and get a new Annuity Starting Date as a result, even though the Board added Section 6.3(e) to prevent such an outcome. The Court finds that the Funds did not anticipate that Qualified Pensioners would be able to circumvent the limitations in Section 6.3(e) merely by virtue of having retired prior to October 1, 1997. Accordingly, the Worthy factors favor the Funds.
Notice of the adoption of Section 6.3(e)
Finally, Centanni argues that the adoption of Section 6.3(e) required notice to all beneficiaries. (Rec. doc. 17, p. 7). Centanni was not given notice of the new language "Annuity Starting Date," and therefore, her argues, the provision does not apply to him. See 29 U.S.C. § 1024(b). The Fifth Circuit has elaborated on the notice requirement, holding that "an amendment to a welfare benefit plan is valid despite a beneficiary's lack of personal notice, unless the beneficiary can show active concealment or `some significant reliance upon, or possible prejudice flowing from' the lack of notice." Godwin v. Sun Life Assurance Company of Canada, 980 F.2d 323 (5th Cir. 1992) citing Govoni v. Bricklayers, Masons and Plasterers Int'l Local No. 5 Pension Fund, 732 F.2d 250, 252 (1st Cir. 1984); See also Williams v. Plumbers Steamfitters Local 60 Pension Plan, 48 F.3d 923, 926 (1995). With respect to the reliance prong, "analysis of Giovani v. Bricklayers, upon which Godwin relies for the reliance/prejudice doctrine, Godwin, 980 F.2d at 328, reveals that more than just mere reliance is necessary. There must be reliance to the detriment or prejudice of the plaintiffs." Whitfield v. Torch Operating Company, 935 F.Supp. 822, 832 (1996) (E.D.La. Fallon). Centanni claims he significantly relied upon and was prejudiced by the lack of notice. (Rec. doc. 17, p. 7). In contrast, the Funds, although conceding that the no notice was given, assert than none was required because Centanni has not demonstrated significant reliance or prejudice. (Rec. doc. 19, p. 5).
Centanni asserts in a sworn affidavit that he was aware of the situations of Goslee and Robertson who returned to work and then had their pensions recalculated as though they had retired for the first time, and that "the opportunity to increase my pension benefits by returning to work in the longshore industry was a significant incentive for me to take the job as Dispatcher for Local Union 1497." (Rec. doc. 17, ex. 4, ¶ 6-7). In the notes that accompany Centanni's affidavit, Centanni's son, Raymond Centanni, who is authorized to deal with the Board regarding the calculation of Centanni's pension calculation, recounts several meetings he had with Board members in which he repeatedly expressed an interest in having Centanni's pension recalculated with a new Annuity Starting Date. (Id.).
The Court finds that when Centanni took the job he did rely on his understanding that he would receive a new annuity starting date that would substantially increase his pension. However, the Court finds that Centanni did not rely to his detriment, nor did he suffer prejudice as a result. See Whitfield, 935 F.Supp. at 832 ("the evidence shows that, while plaintiffs relied on the informal plan, they took no action in reliance on the plan to their detriment or prejudice."). As the Funds note, Centanni did not claim in his affidavit that he would have done anything differently had he been put on notice of the new language. See Id. ("There was no reliance to their detriment because there is no evidence that they would have acted or done anything differently."). Furthermore, Centanni received tangible benefits from his employment at Local 1497. He was paid for the seven months that he worked there and also increased his pension earnings by $74 per month. Although this was not the substantial benefit Centanni was anticipating, it certainly cannot be regarded as detrimental or prejudicial.
Conclusion
The Court finds that Section 6.3(e) of the Plan applies to Centanni and permits the Funds to recalculate his pension without a new Annuity Starting Date. There are no factual issues in dispute.
Accordingly,
IT IS ORDERED that the Fund's Motion for Summary Judgment is GRANTED.