Opinion
01 Civ. 5196 (HB)
April 10, 2002
OPINION ORDER
Plumbers Pipefitters National Pension Fund, National Pension Fund trustees Maddaloni, Patchell, Perno, Carison, House, and Durr, Sr., and National Pension Fund Administrator Sweeney (collectively, "Defendants"), move for summary judgment on all five causes of action asserted by Joseph Miro, Jr. ("Plaintiff'). Plaintiff in turn cross moves for summary judgment. Specifically, Plaintiff asserts the following five causes of action: (1) Defendants attempted to deprive Plaintiff of substantial retirement benefits in violation of ERISA, 28 U.S.C. § 1001et seq.; (2) Defendants attempted to benefit themselves by interfering with Plaintiffs right to retirement benefits in violation of ERISA; (3) Defendants retaliated against Plaintiff in violation of ERISA, 28 U.S.C. § 502; (4) Defendants discriminated against Plaintiff on the basis of his disability in violation of ERISA; (5) Defendants discriminated against Plaintiff on the basis of his disability in violation of New York State Human Rights Law, Executive Law § 296 et seq. Plaintiff seeks the following relief: (1) award of attorneys fees pursuant to ERISA, 28 U.S.C. § 502(g)(1); (2) full payment of all past, present, and future retirement benefits as set forth in the retirement plan, or, in the alternative, damages in the amount of $500,000.00; (3) compensatory damages in the amount of $500,000.00; (4) declaratory judgment that Plaintiff is eligible for retirement benefits; (5) statutory penalties and punitive damages for violation of Plaintiffs statutory rights. In addition, Defendants seek an award of fees and costs pursuant to 28 U.S.C. § 1927; Fed.R.Civ.P. Rule 11; and 29 U.S.C. § 1132(g). For the reasons detailed more fully below, Defendants' motion for summary judgment is granted in its entirety and Defendants' request for an award of fees and costs is denied.
As Defendants correctly point out in their memorandum of law in support of Defendants' motion for summary judgment, counts one through four of Plaintiffs complaint constitute a "group of claims loosely based upon various phrases of the Employee Retirement Income Security Act of 1974 (ERISA). Each of the Counts in the complaint alleges that Joseph Miro was damaged in some fashion due to trustees' decision to deny a disability benefit to him." (Defs' Memo of Law at 4-5). The claims are duplicative. Further, Plaintiffs sixth cause of action for promissory estoppel was withdrawn at Plaintiffs deposition. (Miro Dep. at 117 ("Counsel, we're going to withdraw the promissory estoppel claim for a number of reasons")). That claim need not be considered here.
28 U.S.C. § 1927 provides, in relevant part, that "[a]ny attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct." 29 U.S.C. § 1132(g) provides, in relevant part, that "(1) [i]n any action under this subchapter (other than an action described in paragraph (2)) by a participant, beneficiary, or fiduciary, the court in its discretion may allow a reasonable attorney's fee and costs of action to either party."
BACKGROUND
Plaintiff, member and beneficiary of Defendant Plumbers Pipefitters National Pension Fund ("National Pension Fund"), brought this lawsuit for payment of benefits that he contends were wrongfully withheld in violation of ERISA, 28 § 1001 et seq. Defendant National Pension Fund is an employee benefit plan organized by the Plumber and Pipefitters' union locals, promulgated and operating pursuant to ERISA and contributed to by participating contractor/employers; Defendants Maddaloni, Patchell, Perno, Carlson, House, and Durr, Sr. are trustees of the retirement plan ("trustees"); and Defendant Sweeney is administrator of that plan ("administrator").
From 1970 to 1983, Plaintiff worked for plumbing contractors under the terms of collective bargaining agreements as negotiated by Plumbers Local Union No. 2. (Robinson Decl. Ex. 6). As a result of his employment, Plaintiffs employers made payments on his behalf to the Joint Plumbing Industry Board Pension Plan for Members of Local No. 2 ("Local No. 2 Pension Fund"). (Miro Dep. at 10-11). In 1983, Plaintiff went into business for himself as an owner of Regis Mechanical Corporation ("Regis") (Miro Dep. at 15); in 1994, Plaintiffs business failed and Regis was dissolved.
In April of 1994, Plaintiff applied to the Social Security Administration ("Administration") for disability benefits, representing to the Administration that he was disabled since January 28, 1994 on account of a heart condition that prevented him from working. (Pl's Compl. ¶ 16; Robinson Decl. Ex. 8). After his claim was initially denied, and following an appeal, on August 17, 1995 Administrative Law Judge Mary B. Cerbone (presumably after remand from the Appeals Council but I cannot tell from any of the papers before me) determined that Plaintiff had in fact suffered from a "disability" since January 28, 1994 as that term has been defined by the Social Security Act, that is, an "inability to engage in any substantial gainful activiy . . . ." 42 U.S.C. § 423(a). (Miro Aff. Ex. D). Based on this decision, Plaintiff was "entitled to a period of disability commencing January 28, 1994." (Miro Aff. Ex. D).
Effective May 1, 1999, the Local No. 2 Pension Fund merged into Defendant National Pension Fund. (Robinson Decl. Ex. 1). Pursuant to Section 9.03 of the National Pension Fund, the "[National] Trustees shall have the exclusive right and discretionary authority to construe the terms of the [Pension] Plan, to resolve any ambiguities, and to determine any questions which may arise with the Plan's application or administration, including but not limited to determination of eligibility for benefits . . . ." (Robinson Decl. Ex. 2). On May 6, 1999, National Pension Fund received Plaintiffs application for disability benefits (Robinson Decl. ¶ 12); to support his claim, Plaintiff included in his application Administrative Law Judge Cerbone's decision determining that he was disabled as of January 28, 1994. (Robinson Decl. ¶ 13). On September 13, 1999 National Pension Fund made an initial determination to deny Plaintiff disability benefits. (Robinson Decl. Ex. 11). Although Plaintiff appealed that decision to Defendant trustees on October 13, 1999, that appeal was denied on January 25, 2000 (Robinson Decl. Ex. 19) and Plaintiff was so informed by the trustees on February 17, 2000. (Robinson Decl. Ex. 19).
The trustees found that Plaintiff did not satisfy the eligibility requirements for disability benefits under the provisions of either the National Pension Plan or the former Local No. 2 Pension Plan, as restated and amended effective January 1, 1976. (Robinson Decl. Ex. 19). More precisely, the trustees adverted to the Integration and Merger Agreement between the National Pension Fund and the former Local No. 2 Plan, pursuant to which a participant is eligible to have his benefit calculated under the rules of the National Plan if he has earned one-tenth of a year of future service credit in any of the five consecutive calendar years prior to the effective date of the mergers. Since Plaintiff did not earn the necessary one-tenth of a year of future service credit during the five years prior to May 1, 1999, the date of the merger, the trustees determined that his disability benefits would be calculated under the rules of the former Local No. 2 Plan. (Robinson Decl. Ex. 16). Pursuant to Section 3 of that Plan, Plaintiff would be entitled to disability benefits only by satisfying all three of the following "work test" rules: the participant must "(i) become totally and permanently disabled (regardless of age) prior to the December 31 following a One Year break; (ii) retain credit for at least fifteen (15) years of Benefit Service; and (iii) has been awarded a disability Social Security pension. (Robinson Decl. Ex. 10). The "One Year Break" is defined in Article 1, Section 3, of the Plan as "any calendar year in which an employee failed to work at least 250 hours for a Contributing Employer." (Robinson Decl. Ex. 10). In addition, pursuant to an amendment to the Local No. 2 Pension Plan, effective January 1, 1997, a plan participant could accrue a special benefit service for periods of unemployment during the period June 29, 1994 through June 24, 1997 if the participant was "willing and able to work" during this period, that is, if "during the applicable period the participant had either worked for an employer party to a collective bargaining agreement with the Union or signed on to the list maintained by the Union of those active plumbers who were ready, willing and able to work within the Territory and that such participant was not then entitled to receive workers compensation or disability benefits from any governmental agency . . . ." (Robinson Decl. Ex. 4 at ¶ 3(b)). In order to receive this special unemployment credit, a participant must have been on a hiring hall list as a journeyman during the period from June 29, 1994 through June 24, 1997. (Robinson Decl. Ex. 19).
After considering Plaintiffs appeal, the trustees upheld the original decision to deny him disability benefits on the ground that he failed to satisfy all three "work test" rules of the Local No. 2 Pension Plan. Regarding the first rule, the trustees found that Plaintiff was unable to demonstrate that he became "totally and permanently disabled" prior to December 31, 1984. More specifically, they determined that Plaintiffs "one year break" occurred in 1983 since he only worked fifty-six hours for a contributing employer that year — more than ten years after Plaintiff became disabled as determined by Administrative Law Judge Cerbone. (Robinson Decl. Exs. 6 19). Regarding the second rule, the trustees found that Plaintiff failed to demonstrate that he "retain[ed] credit for at least fifteen (15) years of Benefit Service," basing this determination on the fact that Plaintiff accrued only 11 3/4 years of Benefit Service Credit from 1970 through 1983 (Robinson Decl. Ex. 6) and failed to establish that he accrued any additional special benefit unemployment credits during the period from June 1994 through June 1997. (Robinson Decl. Ex. 19). For these reasons, the trustees upheld the Fund office's decision to deny Plaintiff disability benefits.
DISCUSSION
1. Summary Judgment Standard
In a motion for summary judgment, the burden is on the moving party to establish that no genuine issues of material fact are in dispute and that it is entitled to judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986); Fed.R.Civ.P. 56(c). A dispute regarding a material fact is genuine "`if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'" Aldrich v. Randolph Cent. Sch. Dist., 963 F.2d 520, 523 (2d Cir. 1992) (quoting Anderson, 477 U.S. at 248, cert. denied, 506 U.S. 965 (1992)). The court resolves all ambiguities and draws all inferences in favor of the nonmoving party in order to determine how a reasonable jury would decide. Aldrich, 963 F.2d at 523.
2. Denial of Disability Benefits
Plaintiff alleges that Defendants wrongfully denied him disability benefits to which he was rightfully entitled under Defendants' pension fund. Accordingly, the Court must determine the validity of Plaintiffs benefit claim pursuant to ERISA, 29 U.S.C.A. § 1132(a)(1)(B).
That statute states, in relevant part, "A civil action may be brought [under ERISA] — (1) by a participant or beneficiary — (A) for the relief provided for in subsection (c) of this section, or (B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan . . . ."
A denial of benefits challenged under this provision of ERISA is "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." Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989); see also Lidoshore v. Health Fund 917, 994 F. Supp. 229, 232 (S.D.N.Y. 1998). The administrator or fiduciary must shoulder the burden of proving that a deferential, rather than a de novo, standard of review applies to the challenge at issue. Kinstler v. First Reliance Standard Life Ins. Co., 181 F.3d 243, 249 (2d Cir. 1999). If the administrator or fiduciary is successful in proving that such discretionary authority is reserved, then the Court must review the challenge according to an arbitrary and capricious standard, reversing the denial of benefits only if the decision appears "without reason, unsupported by substantial evidence or erroneous as a matter of law." Fay Fay v. Oxford Health Plan, No. 01-7135, 2000 WL 483464, at * [page no. unavailable] (2d Cir. Mar. 27, 2002).
I find that Defendants have successfully shouldered their burden of proving that a deferential, rather than a de novo, standard of review applies in this case. Accordingly, the decision of the trustees will be reversed only if it is unreasonable, unsupported by the proffered evidence, or simply wrong as a matter of law. Defendants point in particular to Section 9.03 of the National Pension Fund Plan, which explicitly states that "[t]he Trustees shall have the exclusive right and discretionary authority to construe the terms of the Plan, to resolve any ambiguities, and to determine any questions which may arise with the Plan's application or administration, including but not limited to determination of eligibility for benefits . . . ." (Robinson Decl. Ex. 2).
Plaintiff fails to overcome his burden. As a preliminary matter, it is undisputed that Plaintiff worked in covered employment until 1983 and therefore suffered a "break in service at that time. Consequently, his eligibility benefits are governed by Article IV, Section 3, of the Local No. 2 Plan, as restated and amended effective January 1, 1976, in effect in 1983. While Plaintiff satisfies the third "work test" rule set forth in that section,
The most current Local No. 2 Plan, restated and amended effective October 1, 1994, provides as follows:
Section 1 — Establishment of Plan
The Plan is restated and amended effective through October 1, 1994. The rights of any Employee who has died, retired, terminated with a vested benefit or suffered a Break in Service under a prior Plan, will be determined under the Provision of the Plan as in effect at the time of death, retirement or Break in Service.
(Robinson Decl. Ex. 5). The trustees determined that Plaintiff had a vested benefit and terminated covered employment in 1983; accordingly, the terms of the Local No. 2 Pension Plan in effect in 1983, the version as restated and amended effective January 1, 1976, governs Plaintiffs eligibility for disability benefits.
this is insufficient since Section 3 requires that all three "work test" rules must be met. Clearly, it was not "arbitrary and capricious" for the trustees to determine that Plaintiff lacked the requisite fifteen years of "benefit service" required under the second "work test" rule and that he was not entitled to the special benefit credits available to participants pursuant to the January 1, 1997 amendment to the Local No. 2 Plan. Specifically, Plaintiff accumulated only 11 3/4 years of benefit service from 1970 through 1983; therefore, he could only satisfy the second "work test" rule by establishing that he was entitled to special service credits. Although Plaintiffs name appears on a chart identifying his service credit for 1970 through 1983, and although there are entries on the chart detailing service credit hours for the years 1994, 1995, 1996, and 1997 (Miro Aff. Ex. B), Plaintiff was nevertheless unable to provide proof that Local Union No. 2 was in receipt of this actual listand openly admitted at his deposition that he filled in those hours himself (Miro Dep. at 94). Although Plaintiff did not in fact work during this period — since he was disabled — he claims that he is entitled to a total of 3000 additional service credit hours. As Defendants point out in their reply memorandum, the "legitimate records from the Local No. 2 Pension Fund demonstrate that Mr. Miro was not given any service credit for 1994 through 1997 (because he was disabled)." (Defs' Reply Memorandum at 7). Indeed, not only did Plaintiff himself admit that he was disabled as of June, 1993 — and therefore not "willing and able" to work in covered employment from 1994 through 1997 — but the uncontroverted evidence indicates that he was receiving disability benefits from the Social Security Administration and thereforeineligible for special credit according to Section 3(b) of the Special Coverage Period Amendment, which specifically excludes any participant who was entitled to receive "disability benefits from any governmental agency" during the special coverage period. (Robinson Decl. Ex. 4). While Plaintiff did not in fact receive benefits until October, 1995, Administrative Law Judge Cerbone clearly stated that "the claimant is entitled to a period of disability commencing January 28, 1994." (Robinson Decl. Ex. 8, emphasis added). For this reason, I find that it was entirely reasonable for Defendants to determine that Plaintiff failed to satisfy the second "work test" rule for special coverage and therefore, on that ground alone — although Plaintiff fails other of the tests as well — to deny Plaintiff disability benefits. C. Defendants' Request for an Award of Fees and Costs
I agree with Defendants that Plaintiffs claim that his situation falls within the scope of an exception to the fifteen-year benefit service requirement in section 3(a)(ii) of the plan is without merit. According to that exception, "[i]f a Participant becomes disabled with fourteen (14) years of Benefit Service, a full year of Benefit Service will be granted for the year immediately following the year of disability. The disability retirement date shall be the January 1 following the year in which the fifteenth year of Benefit Service was granted." (Robinson Decl. Ex. 10). According to Administrative Law Judge Cerbone, Plaintiff became disabled on January 28, 1994; at that date, Plaintiff only had 11 3/4 years of benefit service. Accordingly, the exception in the plan does not apply to Plaintiffs situation.
Coupled with the fact that Plaintiff fails to address his fifth cause of action in his brief, my determination that the trustees' decision to deny Plaintiff disability benefits was not "arbitrary and capricious" is dispositive of this cause of action as well.
In their reply memorandum, Defendants seek an award of fees and costs under 28 U.S.C. § 1927, Fed.R.Civ.P. Rule 11, and 29 U.S.C. § 1132(g) on the grounds that Plaintiffs opposition papers are "premised upon false testimony" and thus led to an unnecessary expenditure of the Court's resources; that Plaintiff and his attorney submitted affidavits to the Court that contradicted his prior deposition testimony; and that Plaintiff opposed Defendants' summary judgment in bad faith.
I find Defendants' request for an award of fees and costs on the whole without merit. As far as attorneys' fees under 29 U.S.C. § 1132(g) are concerned, I do not find that Defendants have satisfied the five factors set forth in Salovarra v. Eckert, 222 F.3d 19, 27-28 (2d Cir. 2000), that courts must consider in determining an award of fees to either party: (1) the degree of the offending party's culpability or bad faith, (2) the ability of the offending party to satisfy an award of attorney's fees, (3) whether an award of fees would deter other persons from acting similarly under like circumstances, (4) the relative merits of the parties' positions, and (5) whether the action conferred a common benefit on a group of pension plan participants. For instance, although it is clear that Plaintiff misunderstood the terms of his pension plan as well as whether he was on the "hiring list" for Local Union No. 2, I am not convinced that he intentionally provided conflicting responses regarding these issues in bad faith. It may be that more time expended by you and your client in an effort to simplify the terms at issue would be prudent expenditure.
Similarly, I remain unconvinced by Defendants' argument that Plaintiff opposed their summary judgment motion in bad faith, thus permitting fees under 28 U.S.C. § 1927, as well as by their contention that the Court ought to impose Rule 11 sanctions on the Plaintiff for submitting affidavits that contradict prior deposition testimony. While it is clear that Plaintiff was mistaken, as noted supra. I do not find that Defendants have described with requisite specificity Plaintiffs conduct that was allegedly in violation of Rule 11(b). For these reasons, Defendants' request for an award of fees and costs is denied.
CONCLUSION
For the foregoing reasons, Defendants' motion for summary judgment as to Plaintiffs five causes of action before me is granted and Plaintiffs cross motion is denied. Furthermore, Defendants' request for an award of fees and costs is denied. The Clerk is instructed to close this case and any open motions.