Opinion
Case No. 1:04cv2503.
March 7, 2007
OPINION ORDER
On December 21, 2004, Plaintiff Terrance Freeman ("Freeman") filed the instant action against the Defendant Board of Trustees of the Teamsters Joint Council No. 41 Severance Plan ("Board of Trustees" or "Defendant") pursuant to the Employee Retirement Income Security Act, as amended, 29 U.S.C. § 1001, et seq. (ERISA), asserting three claims for relief: (1) a claim under ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B), to recover benefits he alleges are due to him under the terms of the Defendant's severance plan; (2) a claim under ERISA § 502(a)(3) for breach of the plan; and (3) a claim under ERISA § 502(a)(3) for breach of fiduciary duty. Thereafter, Defendant moved to dismiss Freeman's second and third claims for relief. On August 23, 2006, the Court granted Defendant's motion to dismiss as to Freeman's second claim for relief (breach of the plan) but found that the third claim for relief (breach of fiduciary duty) survived, at least pending resolution of Freeman's first claim. ( See Doc. # 50.)
Presently before the Court are cross-motions for judgment on Plaintiff's first claim for relief (for the recovery of benefits). The parties have completed the agreed-upon briefing schedule for this claim (Doc. # 35), and, accordingly, this claim is ripe for consideration. For the reasons articulated below, the Court GRANTS Defendant's Motion for Judgment (Doc. # 36) and DENIES Freeman's Motion for Judgment (Doc. # 37). In addition, because this Opinion Order does not leave open the possibility that Freeman can proceed on his claim for breach of fiduciary duty, the Court also ENTERS JUDGMENT in favor of Defendant on that claim as well and DISMISSES this action.
The Court previously outlined the background of this case in its August 23, 2006, Opinion Order granting in part and denying in part Defendant's partial motion to dismiss. Portions of that background are repeated here, with additional relevant facts included.
This case centers around the question of which date should be used as Freeman's eligibility date for purposes of calculating his service credit under Defendant's severance plan ("the Severance Plan" or "the Plan"). Defendant established Freeman's eligibility date as April 1, 1995. Freeman alleges in his complaint that Defendant incorrectly established his eligibility date, arguing that the correct date should be October 1, 1976.
A. The Plan
The issue is whether Freeman performed services for a "participating employer" during the years 1973 to 1993. There is no dispute that Freeman worked for a participating employer from 1993 to 1995 and, thus, is given credit for his service during those years. A participating employer is defined by the relevant documents as a "participating Teamster Union Local which is a member of Teamsters Joint Council 41." (Doc. #36, Ex. B. (hereinafter, "Admin. Rec.") at 72, 83). The Teamsters Joint Council No. 41 ("Joint Council") sponsors the Severance Plan. Although the Plan does not specifically define what constitutes an "employee," it provides that participants in the Plan are employees who have attained the age of twenty-one and have completed the requisite number of years (two or three, depending on the effective date of the Plan) of 1000 or more hours of service. (Admin. Rec. at 74, 86.) In turn, "Hours of Service" are defined by the Plan as "[e]ach hour for which an Employee is paid, or entitled to be paid, for the performance of duties for the Employer." ( Id. at 85.)
Under the Plan effective in the 1970s, an employee was not eligible to participate until he or she performed three years of service, which is why Freeman would not be eligible until 1976 if he claims to have worked for a participating employer starting in 1973. There are two Plans included in the administrative record that were effective during the periods at issue in this case — one from 1976 to 1990, and the other from 1990 to 1997. For purposes of the present case, the primary difference between the plans is the number of years of service required before an employee was eligible to participate. The Plan effective from 1976 to 1990 required that an employee complete three years of service of not less than 1000 hours ( See Doc. # 36, Ex. B, at 73), and the Plan effective from 1990 to 1997 required only two years of service for the same number of hours ( Id., at 86) (although there was no Plan in the administrative record that was effective before 1976, the parties do not dispute that the same three-year requirement was in place prior to that time).
B. "Shared Employee" Arrangement
Freeman alleges that, starting on October 1, 1973, he began working for Teamsters Local Union No. 507 ("Local 507"), and that, from October 1, 1976 to 1993, he worked as a business agent for Local 507. It is undisputed that, during those years, Local 507 was a member of the Joint Council and a participating employer within the meaning of the Severance Plan. He also alleges that, from 1976 to 1993, he was being paid by the Cleveland Bakers and Teamsters Pension Fund and the Cleveland Bakers and Teamsters Health and Welfare Fund ("the Funds"), which are non-participating employers. (Doc. #1 at ¶ 27). A position as a business agent for Local 507 would qualify Freeman for benefits credit under the Severance Plan, while employment by the Funds generally would not. According to Freeman, however, he was working pursuant to a "shared employee" arrangement that existed between Local 507 and the Funds, in which employees performed services for Local 507 (and other local unions) but were officially employed by (and paid by) the Funds.
This "shared employee" arrangement was the subject of a 1992 action filed by the Department of Labor (DOL) against trustees of certain employee benefit plans, including the Funds that paid Freeman, as well as certain unions, including Local 507. See Reich v. Friedman, Case No. 1:92cv1875 (N.D. Ohio 1992). The complaint in that action alleged, among other things, that the defendants "permitted personnel employed by the Plans . . . to perform services for the Defendant Unions without commensurate reimbursement." The action resulted in a 1993 consent decree in which the unions agreed to pay nearly $2 million to the employee benefit plans. The consent decree came about, in part, because the defendants unilaterally reorganized their operations to eliminate the offending employment arrangement. Freeman alleges that, because of the "shared employee" arrangement, the Trustees in this case did not count Freeman's employment from 1976 to 1993 as being by a participating employer. The consent decree from the DOL action is part of the Administrative Record reviewed by the Trustees in this case in evaluating Freeman's claim for benefits.
C. Certification Form
In 1993, Freeman was elected as Secretary-Treasurer of Local 507. Two years later, in March 1995, Freeman was asked to sign a written certification confirming his employment start date as March 1, 1993 and his eligibility date under the plan as April 1, 1995. The form specifically provided that the period of time for which he was certifying he worked (1993 — 1995) consisted of twenty or more hours per week for Local 507, "and not for any other related organization such as a Health and Welfare Fund or Pension Funds, etc." (Admin. Rec. at 14.) In addition, the certification form provided, directly above the place for Freeman's signature, that "[b]y execution of this Agreement and Consent I hereby waive the right to contest the accuracy of said eligibility date at any time in the future." ( Id.) This written certification was submitted to Defendant by the president of Local 507 pursuant to the terms of the Severance Plan. Based in part on this certification, Defendant later calculated Freeman's eligibility date as April 1, 1995.
At some point (the precise date is unclear from the record), Freeman became the principal officer of Local 507 and withdrew that union from the Joint Council in 1996, such that Local 507 was no longer a "participating employer" for purposes of the Plan. In 2000, Freeman retired, and, in 2002, Local 507 became reaffiliated with the Joint Council.
D. Credit From Other Severance Plans
Freeman alleges that, prior to his retirement in 2000, he did not know whether he was entitled to benefits for his work under the shared employee arrangement from 1976 to 1993. According to Freeman, shortly after his retirement, he filed a request with the Teamsters Affiliate Pension Plan (TAPP), which is the pension plan for the International Brotherhood of Teamsters, for review of his eligibility for his service for the Funds. In 2003, TAPP credited Freeman for his years of service for the Funds under the shared employee arrangement. Neither the actual terms of the TAPP plan nor any written decision crediting Freeman are included in the Administrative Record (except for a simple notification of recalculation, Admin. Rec. at 21-22). The best source of information in the Administrative Record regarding the TAPP decision is an April 9, 2004 memorandum from the Trustees' Administrative Committee, which accompanied the vote sheets provided to the Trustees who voted on Freeman's benefit claim, and which explained the bases for the TAPP attorneys' decision. (Admin. Rec. at 142-43.) According to the memorandum, the TAPP attorneys found that the 1992 DOL action established that Freeman had performed at least some service for Local 507 while being paid by the Funds, and the TAPP attorneys relied on an affidavit from a former Local 507 employee attesting to the fact of Freeman's service for Local 507 during the relevant period of years. Although not indicated in the memorandum, the affidavit on which the TAPP attorneys relied was an affidavit of Paul LaBuda, a business agent for Local 507 from 1980 to 1993. (Admin. Rec. at 145-46.) In his affidavit, LaBuda states that, from 1977 to 1993, Freeman worked a minimum of seventy hours per week over a six day period and spent at least 50% of those hours working for Local 507 as a business agent. This affidavit was also before the Trustees when they considered Freeman's claim.
TAPP is a plan independent from the Joint Council's Plan, from which Freeman apparently was also eligible to receive benefits.
The Administrative Committee was made up of three Trustees whose job it was to, among others, "provide directions to the Trustees where called for in the Plan or requested by the Trustees" and "provide procedures for, and to make decisions as to, allowance or denial of any claims for benefits." (Doc. # 36, Ex. A, at 29.) The Administrative Committee made the initial decision denying Freeman's claim, which was affirmed by the entire Board of Trustees on appeal by Freeman. This committee will be discussed in more detail below, Section I.E.
In addition to TAPP credit, Freeman also claims that, when he was elected as an officer of Local 507 in 1993, he was given seniority for purposes of severance pay and vacation time for his previous service to Local 507 under the shared employee arrangement. The decision to grant Freeman this seniority was made and memorialized at a Local 507 executive board meeting held on February 26, 1993. Freeman submitted an affidavit to the Trustees in support of his claim quoting language from those minutes that granted him seniority for purposes of severance pay, but he did not provide a copy of the minutes. Although Freeman requested that Local 507 provide a copy to the Trustees, it appears that one was never provided, even though the Trustees and Local 507 share the same attorney.
There is some confusion in the record as to whether this meeting occurred on January 26, 1993 or February 26, 1993, and the actual minutes were not included in the Administrative Record. Indeed, that may explain the difficulty that Freeman, the Trustees, and Local 507 had in locating the minutes to provide to the Trustees in reviewing Freeman's claim. The copy of the minutes that is now before the Court indicates that the meeting occurred on February 26, 1993. Because those minutes were not before the Trustees at the time of their decision and are not part of the Administrative Record, the Trustees moved to strike them from the record and asked the Court to remove them from its consideration. The Court will address its consideration of those minutes below; it only refers to them here for the sake of completeness.
In 2003, after Freeman had been given credit by Local 507 and TAPP for his years of service under the shared employee arrangement between the Funds and Local 507, Freeman formally requested that the Trustees recalculate his credit. On June 15, 2004, the Administrative Committee for the Defendant denied Freeman's claim, and Freeman sought review by the Defendant's Board of Trustees. On July 23, 2004, the Board of Trustees affirmed the denial of Freeman's claim.
E. Conflict of Interest
In addition to the Administrative Record in this case, the Court also permitted Freeman to discover information from Defendant relating to a potential conflict of interest, bias, and omission of materials from the administrative record, finding that Freeman adequately made the threshold showing to support those procedural challenges. ( See Doc. # 28, permitting limited discovery). Significantly, for purposes of the standard of review this Court must apply, Freeman has presented substantial evidence that the Trustees operated under a conflict of interest. Specifically, the Court permitted discovery on this issue for two reasons. First, it allowed discovery because the structure of the Plan indicated that the Plan administrator both funded and administered the Plan, a circumstance which the Sixth Circuit has found presents "an actual, readily apparent conflict" because the administrator incurs a direct expense as a result of the allowance of benefits and gains a benefit from their denial. See Killian v. Healthsource Provident Administrators, Inc., 152 F.3d 514, 521 (6th Cir. 1998). Along those same lines but involving a more direct and personal conflict, the make-up of the Board of Trustees indicated that some of the Trustees were also officers of the Joint Council as well as officers of the participating unions, such as Local 507, meaning that they were also participants in the Plan. Both of these conflicts are relevant.
Freeman, however, has not presented sufficient evidence of bias or omission of materials from the Administrative Record that would affect this Court's review of Defendant's decision. Freeman has not identified any similarly situated employees (i.e., employees who were paid by the funds but who claimed to perform duties for the union) who were granted benefits, such that the Court could conclude that Freeman was treated differently than others because of his individual interactions with the Joint Council or counsel for the Trustees. In addition, Freeman has also not presented any compelling evidence that there were materials considered by the Trustees that are not part of the administrative record.
In this case, the Severance Plan is funded by the Joint Council, whose officers, directors, and trustees also sit on the Board of Trustees and administer the Plan. (Doc. # 36, Ex. A, at 13, 38.) Defendant contends that only seven of the twenty-four Trustees are Joint Council officers (as opposed to directors and trustees), and that Joint Council officers are the only members that can actually vote and direct the affairs of the Joint Council, including how much it will contribute to the Severance Plan. Defendant contends, therefore, that only a minority of the twenty-four Trustees actually fund the Plan and, therefore, that the administrator does not both fund and administer the Plan. The Court, however, finds this distinction to be mostly hollow because the Administrative Committee of the Plan, which is identified in the Plan documents as the "Plan Administrator," is (presently and at the time the Trustees reviewed Freeman's claim) made up of three Trustees — Charles Cimino, Jr., Dennis Weinert, and Mark Frey — all of whom were officers of the Joint Council and were the Trustees who initially rejected Freeman's claim and later recommended to the entire Board of Trustees that Freeman's claim be denied. Indeed, in their March 19, 2004 memorandum to all the Trustees of the Severance Plan, these three Trustees wrote that they "recommend that the Board of Trustees deny Mr. Freeman's request to designate his `Entry Date' in the Severance Plan." (Admin. Rec. at 46.) They included the same recommendation in their April 9, 2004 memorandum that accompanied the vote sheets the Trustees were to mail in on Freeman's claim. The Trustees voted 23-1 to deny Freeman's claim. Therefore, even though there are only seven Joint Council officers who sit on the twenty-four member Board of Trustees, three of those officers wield the greatest amount of influence. Although these three officers do not constitute a majority of Joint Council officers who can vote to direct the affairs of the Joint Council, their influence is nonetheless substantial.
More significant, however, is the fact that the Trustees were actual participants in the Plan — i.e., they held severance accounts made up of Plan assets. Freeman's discovery revealed that, at the end of 2003, near the time when the Trustees considered Freeman's claim, the combined accounts of the Trustees totaled $562,264.62, or approximately 26% of the benefit assets of the Plan. Even worse, the three Trustees that formed the Administrative Committee and recommended denying Freeman's claim held approximately 13% of the benefit assets, with Cimino holding the most at $171,560.05. If the Trustees recalculated Freeman's entry date to grant him an additional seventeen years of service credit, Freeman's benefits would directly reduce the Trustees' accounts. Defendant argues that there were 140 participants in the Plan and, therefore, that each participant's pro rata share reduction would be minimal. That argument again rings hollow, however, because twenty-four of the participants who voted on Freeman's claim had accounts worth over one-fourth of the benefit assets. Defendant does not dispute the numbers presented by Freeman, it only makes the bare assertion that "simply because the Trustees may also hold participant accounts does not create an inherent conflict of interest." (Doc. #36, at 32.) The Court disagrees, and will assess the Trustees' obvious conflict when applying the applicable standard of review, discussed below.
II. ANALYSIS
A. Standard of Review
The standard of review applied by a district court reviewing an ERISA plan administrator's decision to deny benefits depends on the amount of discretion the plan vests in the administrator. Where the administrator has no discretion under the plan to determine benefits eligibility, a district court reviews the administrator's decision de novo. Calvert v. Firstar Finance, Inc., 409 F.3d 286, 291 (6th Cir. 2005). Where the plan gives the administrator "discretionary authority to determine eligibility for benefits or to construe the terms of the plan," however, a district court reviews the decision under an arbitrary and capricious standard. Id. at 292; see also Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). In this case, there is no dispute that the Severance Plan gives the Board of Trustees "full discretion and authority to make the final decision regarding all areas of Plan interpretation and administration." Accordingly, the arbitrary and capricious standard of review applies in this case.
In reviewing a plan administrator's decision to deny benefits, a district court generally is confined to the administrative record that was before the plan administrator. Wilkins v. Baptist Healthcare System, Inc., 150 F.3d 609, 615 (6th Cir. 1998). A district court, however, may consider evidence outside of the administrative record to the extent that such evidence "is offered in support of a procedural challenge to the administrator's decision, such as an alleged lack of due process afforded by the administrator or an alleged bias on its part." Id. at 619 (Gilman, J., concurring). In the present case, the Court considers the evidence presented by Freeman that establishes that the Trustees were operating under an inherent conflict of interest when reviewing his claim.
In a case where a conflict of interest exists, it is settled that the conflict "should be taken into account as a factor in determining whether [Defendant's] decision was arbitrary and capricious." Calvert, 409 F.3d at 292 (quoting Univ. Hosps. of Cleveland v. Emerson Elec. Co., 202 F.3d 839, 846 (6th Cir. 2000)). In other words, the standard of review to be applied remains unchanged, but the Court considers the conflict of interest in applying that standard. See id. In this case, as discussed above, the Court finds the conflict to be especially egregious and gives it significant weight its review.
B. Discussion
Defendant argues that its decision should be affirmed by this Court for a variety of reasons. It argues that the Trustees' decision was not arbitrary and capricious because, under the plain language of the Plan, Freeman was not paid by a participating employer during the years in question and, therefore, not eligible; because the Trustees were reasonable to rely on the 1995 certification form signed by Freeman that his eligibility date was April 1, 1995; and because there was nothing in the DOL action or the TAPP decision that was more compelling than their own evidence that Freeman did not work an adequate number of hours for Local 507. In addition, Defendant argues that, by virtue of the 1995 certification form, Freeman has waived his right to challenge his eligibility date and should be estopped from doing so because Defendant has detrimentally relied on his signed representations in that form. Finally, Defendant argues that the doctrine of laches prevents Freeman from bringing his claim because he certified his eligibility date in 1995, but waited eight years until 2003 to request that his eligibility date be recalculated.
In response, Freeman argues that the Trustees' decision was arbitrary and capricious because it ignored the DOL Consent Decree; it failed to apply the correct test to determine that the Funds were only his "nominal employers" but that his "real employer" was Local 507, despite the source of his paycheck; and it did not give sufficient weight to the LaBuda affidavit, in which LaBuda, a Local 507 employee, stated that Freeman had performed over 1000 hours of service for Local 507 for each year from 1977 to 1993. Freeman also argues that the waiver in his 1995 certification is not enforceable because it was not a knowing waiver of his right to challenge his eligibility date, and that he is not barred by the doctrine of laches because he was not aware of his eligibility under the shared employee arrangement until 2000, at which time he told Defendant he would raise the issue with them after he sought review from the IBT's TAPP.
1. The Decision Was Not Arbitrary and Capricious
After reviewing the Administrative Record and considering the parties' arguments, the Court concludes that, though perhaps unfair, Defendant's decision to deny Freeman's claim was not "arbitrary and capricious," even considering the substantial conflict of interest under which the Trustees operated. The crux of this issue is whether Freeman presented enough evidence to the Board of Trustees that he performed 1000 hours of service per year for Local 507 during the years in question, such that it would be irrational for the Trustees to conclude otherwise. The Court finds that he did not.
The DOL consent decree confirms, and Defendant does not deny, that employees of the Funds performed services for certain Unions, including Local 507. Specifically, the Funds employed Field Representatives (FRs) and the unions employed Business Agents (BAs) who essentially performed the same functions for their respective employers and who, in many cases, performed each other's functions. These FRs and BAs were responsible for visiting the various locations of participants of the Funds and the Unions, performing audits and answering questions about benefits and rights. The Funds and the Unions admitted, in their position statement in the DOL action, that the FRs and the BAs often pooled their resources and that an FR would visit a location and handle both fund and union business there, and that a BA would visit another location and handle both fund and union business there. Freeman claims that his official title was as an FR for the Funds but that he was actually spending the requisite number of hours performing services as a BA for the Unions.
While it is clear from the DOL consent decree that FRs, including Freeman, probably spent some portion of their time performing services for the Unions, the question remains whether Freeman put forward enough evidence to demonstrate the he worked the requisite number of hours (1000 per each year in question) for the Unions to make him eligible for Plan benefits. In support of his assertion that he did, Freeman put forward the following: (1) his own affidavit in which he attests to the work he did for Local 507 during his years of service, including his participation at numerous conventions and conferences as a representative of Local 507; (2) an affidavit of Paul LaBuda, who attests that Freeman did perform services totaling over 1000 hours per year from 1977 to 1993; and (3) the fact that he was given credit by both TAPP and Local 507 for the years in question.
On the other hand, in its March 19, 2004 memorandum to the Board of Trustees, the Administrative Committee cited to a 1992 "Union/Fund Shop Activity Assessment Study" commissioned by the Funds and performed by a management consultant company to support its conclusion that a vast majority of Freeman's time was devoted to Funds-related activity, not to the Unions. That study concluded that FRs spent about 72.8 to 77.5 percent of their time performing duties for the Funds and about 22.5 to 27.2 percent of their time on Union-related activity. Based on fifty-weeks of work per year, 1000 hours of service for the Union would require twenty hours per week. Even if one takes the higher of the two percentages that an average FR spent on Union activities, in order to achieve twenty hours of service for the Unions each week, a FR would have to work a total of over sixty hours per week. Freeman did not offer evidence aside from the LaBuda affidavit to support such an assertion, and Defendant argues that, based on Freeman's pay records, such an assertion is not supportable.
The question is whether it was arbitrary and capricious for Defendant to place more weight on the Shop Study and the other evidence weighing against Freeman (including the 1995 certification form) than on the evidence presented by Freeman. Although, when taking into account Defendant's inherent conflict of interest, this presents a close decision, the Court concludes that it was not arbitrary and capricious. First, Freeman's affidavit was not supported by any documentation and, although it referenced specific conventions and conferences, naming one conference per year, by itself, clearly does not support his assertion that he spent 1000 hours per year performing services for Local 507. In addition, the LaBuda affidavit, a one and a half page document, was also not supported by any documentation and presented only conclusory statements, without specific bases, that Freeman performed 1000 hours of service per year for Local 507. As Defendant argues, there does not appear to be any foundation for some of the assertions made in that affidavit, as evidenced by the fact that LaBuda states that he worked as a business agent starting in 1980 but attests to Freeman's work starting as early as 1977. Further, although the TAPP decision clearly supports Freeman's claim, there was nothing in the record to indicate that the terms of the TAPP plan contained similar participant requirements (i.e., a minimum number of service hours per year), or to establish what was presented to the administrators of that plan for their review. Freeman does not claim that he provided the same information to the Trustees that he provided to TAPP when he submitted his request for benefits. The Administrative Committee even contacted the TAPP attorneys to ascertain their reasoning, but, ultimately, concluded that the 1995 certification form and Shop Study were more convincing than the LaBuda affidavit. Likewise, even if the Court were to consider the fact that Local 507 granted seniority to Freeman for his years of service, it would not compel a different conclusion because, again, the minutes did not reflect any analysis of hours of service performed by Freeman. Indeed, it appears that Local 507's decision was premised on the fact of some historical service (a point the parties do not dispute), not on any particular level of such service.
Defendant points out in its briefs that Freeman has a prior perjury conviction which would, of course, cast doubt on the credibility of Freeman's sworn statements. Because there is no evidence that the Trustees were aware of that conviction at the time they assessed Freeman's affidavit and other sworn statements, this Court does not take that conviction into account in this decision.
Because consideration of the Local 507 executive board minutes would not change the outcome of this decision, the Court need not determine whether they are appropriately considered at this stage. There is support for including them in the Court's review, as they were likely reasonably available to Defendant, given that the minutes were in the possession of Local 507, a member of the Joint Council, and that the same attorney represented both Defendant and Local 507. See Warshaw v. Continental Casualty Co., 972 F.Supp. 428, 430 (E.D. Mich. 1997) (considering evidence that was not before the administrator but was "reasonably available" to it, finding that the administrator "cannot now exclude records which were available to it, but which it chose not to seek.")
This is not to say that the evidence on which Defendant relied was not without flaws. The Shop Study is a self-serving study commissioned by the Funds for use in the DOL lawsuit. In addition, Freeman argues that it is skewed in favor of the Funds because it assumes that work performed by FRs characterized as "general activity" (presumably, desk work, answering phones, etc.) was work for the Funds. Nonetheless, that study is at least based on data measuring 250 different sites visited by Funds and Union representatives and agents and contains survey information indicating that the vast majority of questions posed to FRs and BRs at those sites related to Fund benefits and eligibility. It is not unreasonable for the Trustees to place greater emphasis on that data than on the conclusory statements contained in LaBuda's affidavit.
In the end, although there is support for a decision that Freeman was entitled to have his entry date recalculated, it was not arbitrary and capricious for Defendant to conclude otherwise.
The Court notes that it is not basing its decision on Defendant's argument that the Trustees had the right to apply a "strict payroll" test, such that the inquiry ends when they determine that a beneficiary is paid by the Funds, not Local 507. An hour of service under the terms of the Plan is expressly defined as "[e]ach hour for which an Employee is paid, or entitled to payment, for the performance of duties for the Employer." (Admin Rec. at 85) (emphasis added). The Court does not find that the Trustees properly denied Freeman's claim because he was not on the payroll of Local 507; instead, it finds that the denial was not arbitrary and capricious because, although Freeman put forward evidence that he performed some hours of service for Local 507, he did not put forward sufficient evidence that he performed 1000 hours of service per year for Local 507.
Because the Court finds that Defendant's decision was not arbitrary and capricious on the basis that Freeman failed to present sufficient evidence that he performed 1000 hours of service per year during the relevant years, the Court does not address Defendant's alternative argument that, in addition to the minimum age and hours of service requirement, the certification form required by the Plan also forms part of the "core definition of an `employee' of the Plan." (Doc. #43 at 5.) Though the Court does not resolve that argument, it merits a brief discussion. Defendant essentially argues, primarily in its reply brief, that the Plan actually requires three elements for an individual to be defined as an "employee" who is eligible for Plan benefits: (1) the individual must be twenty-one years old; (2) the individual must have performed more than 1000 hours of service for the requisite number of years; and (3) a certification confirming the individual's hours of service must be sent to the Trustees by that individual's employer. Defendant contends that, absent any one of those requirements, an individual is per se excluded from participating under the terms of the Plan. There is some support for this argument, particularly because the Plan language requiring the employee certification follows the minimum age and hours of service requirements, which are all contained in the section of the Plan entitled "Section 1 — Minimum Requirements" under "Article III — Eligibility." (Admin. Rec. at 74.)
Defendant thus argues that, aside from the waiver contained in the certification form, the very absence of a certification form itself for the years 1976 to 1993 defeats Freeman's claim because it excludes Freeman from the Plan's definition of an eligible "employee." In support of this argument, Defendant relies on Jaeger v. Matrix Essentials, Inc., 236 F.Supp.2d 815, 825 (N.D. Ohio 2002) (O'Malley, J.), in which this Court found that a purported employee (who the defendant argued was more akin to an independent contractor) was not eligible to participate in an ERISA plan because the terms of the plan expressly excluded "individuals whom the Employer does not treat as its employees for federal income and employment tax purposes . . ." In so finding, the Court explained that it did not need to determine whether the plaintiff was a common law employee, as a court typically would pursuant to Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318 (1992) when "employee" is not defined in the plan, because the plan in that case expressly excluded a certain class of employees that included the plaintiff. In the present case, Defendant argues that, like in Jaeger, the Plan expressly excludes Freeman from participating for the years 1976 to 1993 because he lacks a certification for those years. Although the effect of the language of the Plan in this case is more ambiguous than in Jaeger (i.e., the certification, by itself, could be read, as Defendant claims, as a prerequisite for participation, or, alternatively, it could merely be an administrative mechanism evidencing that the participation requirements have been met), there is arguable merit to Defendant's contention. The Court need not decide that question now, however, because it finds that Defendant's decision was not arbitrary and capricious based on Freeman's inability to adequately establish his minimum hours of service, a requirement which Freeman does not dispute is a prerequisite for eligibility.
2. The 1995 Certification and Claim for Breach of Fiduciary Duty
In addition to Defendant's argument that a certification form is a necessary element for an individual to be an eligible "employee" under the Plan, the Court also does not address Defendant's additional arguments, including that the waiver in the 1995 certification form signed by Freeman prevents him from challenging his eligibility date. However, the 1995 certification form is relevant to Freeman's claim for breach of fiduciary duty. In denying Defendant's 12(b)(6) motion to dismiss that claim, the Court noted the general rule that a litigant cannot normally proceed under ERISA § 502(a)(3) — under which Freeman brings his fiduciary claim — if he can also proceed under § 502(a)(1)(B) — under which Freeman brought his first claim for relief (improper denial of benefits) — because § 502(a)(3) has been found to be a "catch-all" provision intended to provide a remedy when no other subsection of § 502 provides adequate relief. Varity Corp. v. Howe, 516 U.S. 489, 515 (1996). The Court permitted Freeman's claim for breach of fiduciary duty to survive, however, on the basis that, if the Court ultimately concludes that Freeman has waived his right to seek benefits because of his 1995 certification form, then any remedy under another subsection of § 502 would be foreclosed by virtue of that waiver. In that case, Freeman could argue, under § 502(a)(3), that Defendant breached its fiduciary duty when it required Freeman to sign the certification form without providing him with adequate information about the effects of the 1993 DOL consent decree.
The Court notes, however, that Freeman has not advanced any compelling arguments that the waiver is not enforceable. Freeman primarily argues that the waiver was not knowing because he was not aware of the effect of the shared employee arrangement on his severance benefits. This argument is not persuasive. After all, in 1995 when Freeman certified his eligibility date, he was clearly aware of the 1993 DOL consent decree. Not only was he an officer of Local 507 who had almost twenty years of experience with the Funds and the Unions, and was one of the subjects of the DOL action, but just two years before he signed his certification form, the Local 507 executive board acknowledged that Freeman should be given severance credit for his prior years of service for Local 507 under the shared employee arrangement. The only factor that weighs in Freeman's favor on this issue is that the certification form is arguably misleading because it specifically provides that the years of service being certified to do not include service "for any other related organization such as a Health and Welfare Fund or Pension Funds, etc."
Because the Court does not base its decision today on the effect of the 1995 certification form, the speculative reason why the Court permitted Freeman's breach of fiduciary duty claim to survive is no longer valid. Accordingly, that claim must also be dismissed.
Additionally, given the evidence that Freeman was aware of the 1993 DOL consent decree when he signed the certification form, and considering Freeman's extensive experience working for the Funds on these very types of certifications, it is unlikely that Freeman could succeed on a breach of fiduciary claim in this case. The Court found that his claim survived a challenge under Rule 12(b)(6) because he had adequately alleged that Defendant breached its fiduciary duty when it did not provide Freeman with information describing the effect of the consent decree on his severance benefits. Given Freeman's knowledge of that decree, demonstrated by the record currently before the Court, it is unlikely that Freeman would be able to prove that such a fiduciary duty existed in this situation.
III. CONCLUSION
For the reasons articulated above, the Court finds that the decision of the Board of Trustees to deny Freeman's request to recalculate his eligibility date was not arbitrary and capricious. Accordingly, Defendant's Motion for Judgment on Freeman's first claim for relief (Doc. # 36) is GRANTED, and Freeman's Motion for Judgment (Doc. # 37) is DENIED. In addition, because this Opinion Order does not leave open the possibility that Freeman can proceed on his claim for breach of fiduciary duty, the Court also ENTERS JUDGMENT in favor of Defendant on that claim as well. There being no other surviving claims, this action is hereby DISMISSED.