134 F.3d 283 (5th Cir. 1998), 96-20480, Spacek v. Maritime Ass'n

Docket Nº96-20480.
Citation134 F.3d 283
Party NameDaniel A. SPACEK, Plaintiff-Appellee, v. The MARITIME ASSOCIATION, I L A PENSION PLAN, and Trustees of the Agreement of Trust, Defendant-Appellant.
Case DateJanuary 22, 1998
CourtUnited States Courts of Appeals, Court of Appeals for the Fifth Circuit

Page 283

134 F.3d 283 (5th Cir. 1998)

Daniel A. SPACEK, Plaintiff-Appellee,

v.

The MARITIME ASSOCIATION, I L A PENSION PLAN, and Trustees

of the Agreement of Trust, Defendant-Appellant.

No. 96-20480.

United States Court of Appeals, Fifth Circuit

January 22, 1998

Page 284

[Copyrighted Material Omitted]

Page 285

Blair B. Brininger, Houston, TX, for Plaintiff-Appellee.

James Patrick Cooney, Jeffrey James Putnam, Royston, Rayzor, Vickery & Williams, Houston, TX, for Defendant-Appellant.

Appeal from the United States District Court for the Southern District of Texas.

Before KING and PARKER, Circuit Judges, and ROSENTHAL, [*] District Judge.

KING, Circuit Judge:

Daniel A. Spacek sued the Maritime Association--I.L.A. Pension Plan and its trustees, alleging that they wrongfully suspended payment of his early retirement benefits pursuant to a plan amendment adopted after he retired, in violation of the Employee Retirement Income Security Act and the common law of contracts. Both sides filed motions for summary judgment, and the district court granted in part and denied in part each motion. The district court granted Spacek's motion for summary judgment on the basis that the application of the amendment to Spacek was arbitrary and capricious because it deprived him of vested rights. We conclude that the district court erred in granting this portion of Spacek's motion, and we reverse and remand for entry of judgment against Spacek.

I. BACKGROUND

The Maritime Association--I.L.A. Pension Plan and its trustees (collectively "the Plan") operate a multiemployer pension plan providing retirement benefits to employees in the longshoring industry from Brownsville, Texas to Lake Charles, Louisiana. The Plan is subject to the Employee Retirement Income

Page 286

Security Act ("ERISA"), 29 U.S.C. §§ 1001-1461.

On November 1, 1985, Spacek, who worked for thirty years in the Houston longshoring industry for an entity covered by the Plan, retired at age fifty-one. Under the provisions of the Plan, Spacek qualified as an early retiree because he had not yet reached sixty-five years of age.

At the time Spacek retired, section 9.1(d)(2) of the Plan provided the following:

If a Retired Participant is reemployed in the industry prior to his Normal Retirement Age, payment of his Age or Vested Pension and Temporary Bridge Benefit, if any, shall immediately cease and he shall immediately become an Active Participant. Such a Participant shall not be entitled to an Age or Vested Pension or Temporary Bridge Benefit while he continues to be employed in the industry or, if greater, for a period of six (6) months measured from the due date of the first monthly installment of his Age or Vested Pension which is withheld pursuant to this Paragraph.

Section 9.1(b)(2) defined "employment in the industry" as follows:

A Participant who is eligible for an Age or Vested Pension shall be considered to be "employed in the industry", or to be continuing his "employment in the industry," during a month if, and only if, both of the following conditions are met:

(i) he is employed in the same industry, in the same trade or craft, and in the same geographic area covered by this Plan, as when he first became eligible for such pension; and

(ii) he is credited with at least one (1) Credit Hour for the Payroll Period ending in such month. 1

Section 15.1 of the Plan reserved the following amendment power:

The Trustees may amend the Plan, from time to time, in any manner not in conflict with the terms of the Trust; provided, however, that no such amendment will cause or permit any part of the Trust properties to be diverted to purposes other than for the exclusive benefit of the Participants or their spouses or permit any part of the Trust properties to revert to or become the property of the Employers.

On April 17, 1991, the Plan adopted an amendment changing the definition of "employment in the industry" under section 9.1(b)(2) by removing the requirement that a participant receive one credit hour before early retirement benefits would be subject to suspension for reemployment (the "Amendment"). A copy of the formal Notice To Participants Eligible For Age Or Vested Pension was mailed to the participants of the Plan on March 12, 1991. This document informed Spacek that payment of his benefits could be suspended if he became reemployed in the same industry, in the same trade or craft, and in the same geographic area covered by the Plan, regardless of whether such employment was with a signatory of the Plan. On May 8, 1991, a second notice was mailed to the participants, informing them that the Amendment would take effect on June 1, 1991. 2

Approximately three years later, on April 28, 1994, Spacek began working as a superintendent for James J. Flanagan Stevedores of

Page 287

Houston. Flanagan is a signatory employer to the Plan. Spacek's return to work constituted reemployment in the industry under amended section 9.1(b)(2), but, because he did not receive any credit hours for his work, 3 not under section 9.1(b)(2) as it existed at the time Spacek retired. Following his reemployment, the Plan suspended payment of Spacek's pension benefits for six months based on the Amendment.

On February 7, 1995, Spacek filed suit in federal district court against the Plan to recover the suspended early retirement benefits. Both sides filed motions for summary judgment, and the district court granted in part and denied in part both motions. In doing so, the district court determined that the application of the Amendment to Spacek and the resulting suspension of payment of his early retirement benefits, while not violative of any particular provision of ERISA, was nonetheless arbitrary and capricious, and thus unlawful. See Spacek v. Trustee of the Agreement of Trust for Maritime Ass'n--I.L.A. Pension Plan, 923 F.Supp. 960, 963-64 (S.D.Tex.1996). Specifically, the district court rejected Spacek's argument that application of the Amendment to him violated the anticutback provisions of 29 U.S.C. § 1054(g). See id. at 963. However, the court also concluded that application of the Amendment to Spacek was arbitrary and capricious because it deprived him of rights that vested contractually at the time of his retirement. See id. at 963-64.

The district court entered final judgment awarding Spacek, among other things, $12,998.95 in retirement benefits. The Plan filed a timely notice of appeal.

II. STANDARD OF REVIEW

"We review the grant of a summary judgment de novo, applying the same criteria used by the district court in the first instance." Texas Medical Ass'n v. Aetna Life Ins. Co., 80 F.3d 153, 156 (5th Cir.1996). Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED.R.CIV.P. 56(c).

III. DISCUSSION

ERISA regulates pension benefits through statutory accrual and vesting requirements. See 29 U.S.C. §§ 1053, 1054. In addition to these statutory protections, when an employer imposes upon itself extra-ERISA contractual obligations in its employee benefits plan, these extra-ERISA obligations are rendered enforceable by contract law. Wise v. El Paso Natural Gas Co., 986 F.2d 929, 937-38 (5th Cir.1993); Vasseur v. Halliburton Co., 950 F.2d 1002, 1006 (5th Cir.1992). Section 1132 of the statute creates a procedural mechanism for enforcing a plan participant's rights, whether predicated upon ERISA's statutory protections or upon the federal common law of contracts. 4 See

Page 288

HENRY H. PERRITT, JR., EMPLOYEE BENEFITS CLAIMS LAW AND PRACTICE § 3.3 (1990) ("ERISA establishes two different kinds of federal rights. The first kind of right is statutory.... The second kind of right relates to obligations created under the common law of trusts or the common law of contracts."); cf. In re HECI Exploration Co., Inc., 862 F.2d 513, 523 n. 18 (5th Cir.1988) (concluding that " § 1132(a)(1)(B) was intended to create a federal common law concerning pension rights which would augment the rights created by ERISA's substantive provisions").

We conclude that the Plan's application of the Amendment to Spacek violated neither the Plan's statutory nor contractual obligations.

  1. Compliance with ERISA

    Questions of statutory interpretation are questions of law and are thus reviewed de novo. Estate of Bonner v. United States, 84 F.3d 196, 197 (5th Cir.1996). We therefore conduct a de novo review in order to determine whether the Plan's application of the Amendment to Spacek comported with ERISA's statutory requirements. See Penn v. Howe-Baker Eng'rs, Inc., 898 F.2d 1096, 1100 (5th Cir.1990) ("[W]e accord no deference to the [plan administrators'] conclusions as to the controlling law, which involve statutory interpretation.").

    Spacek contended in the district court, and again urges on appeal as an alternative ground for affirmation of the district court's judgment, that application of the Amendment to him violated the anticutback provisions of 29 U.S.C. § 1054(g).

    Section 1054(g) provides as follows:

    (1) The accrued benefit of a participant under a plan may not be decreased by an amendment to the plan, other than an amendment described in section 1082(c)(8) or 1441 of this title. 5

    (2) For purposes of paragraph (1), a plan amendment which has the effect of--

    (a) eliminating or reducing an early retirement benefit or a retirement-type subsidy (as defined in regulations), or

    (b) eliminating an optional form of benefit,

    with respect to benefits attributable to service before the amendment shall be treated as reducing accrued benefits.

    29 U.S.C. § 1054(g).

    Spacek argues that application of the Amendment to him violated § 1054(g) because the Amendment decreased his early retirement benefit. As such, he argues,...

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    ...that the employer intends for employee welfare benefits to vest contractually,' " id. at 136 (quoting Spacek v. Maritime Ass'n, 134 F.3d 283, 293 (5th Cir. 1998) (citing cases in the Third, Fourth, Eighth, Tenth, and Eleventh Circuits)), the court held that the "SPD's reservation ......
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    ...ends because obviously no abuse of discretion has occurred.” Baker, 364 F.3d at 629 - 30 (citing Spacek v. Maritime Ass’n, 134 F.3d 283, 292 (5th Cir. Where, as here, the role of the claims administrator presents a conflict of interest -- Cigna evaluates claims......
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    ...3; Reply at 2.) The "application of the abuse of discretion standard may involve a two-step process." Spacek v. Maritime Ass'n, 134 F.3d 283, 292 (5th Cir. 1998). "The court must initially determine whether the administrator's interpretation of the plan is the legally correct......
  • 464 B.R. 361 (C.D.Cal. 2011), CV 10-04806 MMM (VBKx), Hill v. Opus Corp.
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    • Federal Cases United States District Courts 9th Circuit United States District Courts. 9th Circuit. Central District of California
    • 14 Noviembre 2011
    ...different factual context where it serves important policy rationales, would be inappropriate here. Cf. Spacek v. Maritime Ass'n, 134 F.3d 283, 299 n. 14 (5th Cir.1998) (noting that although the " court ha[d] on several occasions held that the doctrine of contra proferentem applies in ......
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78 cases
  • 105 F.Supp.2d 121 (E.D.N.Y. 2000), 98 CV 6020, Berg v. Empire Blue Cross and Blue Shield
    • United States
    • Federal Cases United States District Courts 2nd Circuit United States District Court (Eastern District of New York)
    • 14 Julio 2000
    ...that the employer intends for employee welfare benefits to vest contractually,' " id. at 136 (quoting Spacek v. Maritime Ass'n, 134 F.3d 283, 293 (5th Cir. 1998) (citing cases in the Third, Fourth, Eighth, Tenth, and Eleventh Circuits)), the court held that the "SPD's reservation ......
  • Connecticut General Life Insurance Co. v. Humble Surgical Hospital, LLC, 060116 TXSDC, 4:13-CV-3291
    • United States
    • Federal Cases United States District Courts 5th Circuit United States District Courts. 5th Circuit. Southern District of Texas
    • 1 Junio 2016
    ...ends because obviously no abuse of discretion has occurred.” Baker, 364 F.3d at 629 - 30 (citing Spacek v. Maritime Ass’n, 134 F.3d 283, 292 (5th Cir. Where, as here, the role of the claims administrator presents a conflict of interest -- Cigna evaluates claims......
  • 337 F.Supp.2d 845 (N.D.Tex. 2004), Civ. A. 303-CV-0092, IBEW-NECA Southwestern Health and Benefit Fund v. Gurule
    • United States
    • Federal Cases United States District Courts 5th Circuit United States District Courts. 5th Circuit. Northern District of Texas
    • 18 Agosto 2004
    ...3; Reply at 2.) The "application of the abuse of discretion standard may involve a two-step process." Spacek v. Maritime Ass'n, 134 F.3d 283, 292 (5th Cir. 1998). "The court must initially determine whether the administrator's interpretation of the plan is the legally correct......
  • 464 B.R. 361 (C.D.Cal. 2011), CV 10-04806 MMM (VBKx), Hill v. Opus Corp.
    • United States
    • Federal Cases United States District Courts 9th Circuit United States District Courts. 9th Circuit. Central District of California
    • 14 Noviembre 2011
    ...different factual context where it serves important policy rationales, would be inappropriate here. Cf. Spacek v. Maritime Ass'n, 134 F.3d 283, 299 n. 14 (5th Cir.1998) (noting that although the " court ha[d] on several occasions held that the doctrine of contra proferentem applies in ......
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2 firm's commentaries
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    ...also Joyce v. Curtiss-Wright Corporation, 171 F.3d 130, 135 (2d Cir. 1999). 46. Joyce, 171 F.3d at 136 (quoting Spacek v. Maritime Ass'n, 134 F.3d 283, 293 (5th Cir. 1998) ("we have not joined those circuits that have adopted the position that a general amendment provision in a welfare......
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    ...the Seventh Circuit expressly considered and rejected the Fifth Circuit's decision in Spacek v. Maritime Association, I L A Pension Plan, 134 F.3d 283 (5th Cir. 1998), which had found that a similar change in suspension rules for early-retirement benefits did not violate the anti-cutback ru......