Price v. Bd. of Trustees of The Ind. Laborer's Pension Fund

Citation632 F.3d 288
Decision Date12 January 2011
Docket NumberNos. 09–3897,09–4204.,s. 09–3897
PartiesJames R. PRICE, Plaintiff–Appellee,v.BOARD OF TRUSTEES OF the INDIANA LABORER'S PENSION FUND; Indiana Laborer's Pension Fund, Defendants–Appellants.
CourtUnited States Courts of Appeals. United States Court of Appeals (6th Circuit)

OPINION TEXT STARTS HERE

ARGUED: R. Gary Winters, McCaslin, Imbus & McCaslin, Cincinnati, Ohio, for Appellants. Tony C. Merry, Law Offices of Tony C. Merry, LLC, Columbus, Ohio, for Appellee. ON BRIEF: R. Gary Winters, McCaslin, Imbus & McCaslin, Cincinnati, Ohio, for Appellants. Tony C. Merry, Law Offices of Tony C. Merry, LLC, Columbus, Ohio, for Appellee.Before: SUTTON and McKEAGUE, Circuit Judges; JONKER, District Judge.*McKEAGUE, J., delivered the opinion of the court, in which SUTTON, J., joined. JONKER, D.J. (pp. 298 – 301), delivered a separate concurring opinion.

OPINION

McKEAGUE, Circuit Judge.

This appeal arises at the intersection of numerous areas of complex federal law. We are called upon to sift through this complexity in the hopes of adding clarity. For many years prior to this appeal, James Price received occupational disability benefit payments under an employee benefit plan established and maintained in accordance with the Employee Retirement Income Security Act of 1974 (ERISA). Price's benefits were discontinued after the trustees amended the plan to limit the payment of occupational disability benefits to a period of two years. He then filed suit in federal district court, challenging the denial of his benefits and alleging that the plan amendment violated ERISA because his occupational disability benefits had vested as a matter of law. The district court determined that Price's occupational disability benefits did indeed vest under this court's Yard–Man line of cases and, accordingly, found that the amendment as applied to Price violated ERISA. The pension plan now appeals this determination, arguing that the benefits were not vested. After considering all of the relevant bodies of law, we conclude that the district court failed to apply the appropriate standard of review when analyzing Price's claim. Accordingly, we VACATE the district court's opinion and order and REMAND for further proceedings consistent with this opinion.

I.

The facts in this case are undisputed. The Indiana State District Counsel of Laborers and Hod Carriers Pension Fund (the Fund) is a multi-employer employee benefit pension plan established and maintained in accordance with ERISA. As required by ERISA, the Fund has a written pension plan document (the “Plan”), which sets forth the terms of the benefits provided by the Fund. The Plan indicates that Fund participants must be union employees, working under various collective bargaining agreements. In addition, the Plan also provides that the Fund will be administered by a Board of Trustees (the Board). The Board in turn possesses authority to make benefit determinations, interpret the Plan, and amend the Plan. In granting the Board amendment power, Section 15.1 of the Plan specifically states:

Any amendment to the Plan may be made retroactively by the majority action of the Board of Trustees present and voting in order to bring the Plan in compliance with the Act and any subsequent amendments thereto. It is the desire of the Board of Trustees to maintain the Plan as a qualified Plan and Trust under Code sections 401(a) and 501(a).

The Trustees who are present and voting may amend the Plan by majority action. However, no amendment shall be made which results in reduced benefits for any Participant whose rights have already become vested under the provisions of the Plan on the date the amendment is made, except upon the advice and counsel of an enrolled actuary.

James Price first began receiving disability benefits under the Plan in 1990, after a series of work-related injuries left him unable to work. Price's benefits were initially approved under the Plan's “Total and Permanent Disability Benefit” category. In 2001, the Fund notified Price that he no longer qualified for benefits under this category, but advised him that he could continue receiving benefits under Article 7A's provisions for “Occupational Disability Benefit.” At the time Price began receiving Occupational Disability Benefits, payment of those benefits was limited according to terms set forth in Section 7A.5, which stated that [t]he Occupational Disability Benefit shall be payable only during continued Occupational Disability and until Early Retirement Age under section 2.1(n).” In 2004, the Board exercised its amendment authority under Plan Section 15.1 and amended Section 7.A5 (the Amendment) to state the following:

[T]he Occupational Disability Benefit shall be payable only during a Participant's continued Occupational Disability and—

* * *

(b) effective for Occupational Disability Benefits commencing prior to January 1, 2005, for a period not to exceed December 31, 2006, or, if earlier, the Participant's attainment of Early Retirement Age....

Because Price began receiving Occupational Disability Benefits prior to January 1, 2005, his benefits were discontinued after December 31, 2006, according to the Amendment.

Price appealed the discontinuation of his Occupational Disability Benefits to the Board, arguing that the Amendment as applied to him violated ERISA. The Board denied Price's appeal and stated in a written letter to Price's attorney that Occupational Disability Benefits could be amended under the terms of the Plan. Price then filed suit in federal district court under 29 U.S.C. § 1132(a)(1)(B). His complaint alleged that the Amendment violated ERISA because it deprived him of a benefit that had vested as a matter of law.

After a short period of discovery, the parties cross-filed for summary judgment. The district court granted judgment in favor of Price under this court's precedent in Int'l Union, United Auto., Aerospace, & Agric. Implement Workers of Am. v. Yard–Man, Inc., 716 F.2d 1476, 1482 (6th Cir.1983). Price v. Bd. of Trustees of the Ind. Laborer's Pension Fund, et al., 2:07–cv–00933 at 7, 2009 WL 799639 (S.D.Ohio Mar. 24, 2009). According to the lower court, Price's Occupational Disability Benefits vested under Yard–Man at the time he began receiving the benefits because the Plan promised benefits “until Early Retirement Age.” Id. at 8. The district court read this provision as an indication that the parties intended the benefits to vest. Id. In separate orders, the lower court ordered the Fund to reinstate Price's benefits and pay Price's attorney's fees. The Board and the Fund bring this appeal, challenging the district court's determination that Price's Occupational Disability Benefits vested and its award of attorney's fees in favor of Price.

II.

We review a district court's grant of summary judgment de novo. Noe v. PolyOne Corp., 520 F.3d 548, 551 (6th Cir.2008). [S]ummary judgment is appropriate ‘if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.’ Schreiber v. Philips Display Components Co., 580 F.3d 355, 363 (6th Cir.2009) (quoting Fed.R.Civ.P. 56).

III.

We begin by noting that disability benefits are a welfare-type benefit under ERISA, and as such, ERISA's statutory vesting requirements do not apply. See 29 U.S.C. § 1002(1); Robinson v. Sheet Metal Workers' Nat'l Pension Fund, Plan A, 515 F.3d 93, 98 (2d Cir.2008). When a benefit is exempt from ERISA's vesting requirements, no barrier exists to the modification or discontinuation of the benefit. Curtiss–Wright Corp. v. Schoonejongen, 514 U.S. 73, 78, 115 S.Ct. 1223, 131 L.Ed.2d 94 (1995). While ERISA does not require vesting, the parties may nevertheless provide for vesting of welfare benefits through agreement. Schreiber, 580 F.3d at 363. If the parties intended for the benefits to vest and this agreement is breached, an ERISA violation occurs. Id. Neither party in this case disputes that there is no express agreement providing for vesting of Price's Occupational Disability Benefits. Our inquiry does not end here, however, because while Price's benefits may not have vested under any express agreement, this court has long recognized that under certain circumstances an intent to vest can be inferred from specific language in the parties' agreements. See, e.g., Yard–Man, 716 F.2d at 1482. When these circumstances are present such that the inference exists, the benefit vests in favor of the recipient. Accordingly, a unilateral decrease in these vested benefits would result in an ERISA violation. The question for this case then becomes whether the inference is present here.

To answer this question properly, we trace Sixth Circuit case law creating the inference that the parties intended for benefits to vest. The inference first appears in this court's seminal decision in Yard–Man; indeed, the inference has been renamed in many of our cases simply as the Yard–Man inference.” In creating the Yard–Man inference, this court addressed the specific question of “whether retiree insurance benefits continue beyond the expiration of the collective bargaining agreement [based] upon the intent of the parties.” Yard–Man, 716 F.2d at 1479. To answer this question, we applied traditional rules of contract interpretation, consistent with federal labor law, and determined that the provision of the relevant collective bargaining agreement (“CBA”), which specifically provided for retiree benefits, was ambiguous as to whether the parties intended the benefits to vest. Id. at 1480. Due to this ambiguity, we looked to extrinsic evidence, including durational provisions within the CBA and the context of the bargaining process, and determined that the parties did in fact intend for the retiree benefits to vest. Id. at 1480–83.

Subsequent to Yard–Man, ...

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