Duchow v. New York State Teamsters Conference Pension and Retirement Fund, 1068

• Decision Date: 06 October 1982
• Docket Number: No. 1068,D,1068
• Parties: 3 Employee Benefits Ca 2312 Clara DUCHOW, Individually and as Administratrix of the Estate of Herman Duchow, Deceased, Plaintiff-Appellant, v. NEW YORK STATE TEAMSTERS CONFERENCE PENSION AND RETIREMENT FUND, T. E. Nolan, Irving Wisch, William H. Mosley, Sr., Kepler Vincent, Rocco F. DePerno, Jack Canzoneri, Victor Mousseau and Paul Bush as Trustees of the New York State Teamsters Conference Pension and Retirement Fund, Defendants-Appellees. ocket 81-7635.
• Court: U.S. Court of Appeals — Second Circuit

Page 74

691 F.2d 74

3 Employee Benefits Ca 2312

Clara DUCHOW, Individually and as Administratrix of the Estate of Herman Duchow, Deceased, Plaintiff-Appellant, v. NEW YORK STATE TEAMSTERS CONFERENCE PENSION AND RETIREMENT

FUND, T. E. Nolan, Irving Wisch, William H. Mosley, Sr.,

Kepler Vincent, Rocco F. DePerno, Jack Canzoneri, Victor

Mousseau and Paul Bush as Trustees of the New York State

Teamsters Conference Pension and Retirement Fund,

Defendants-Appellees.

No. 1068, Docket 81-7635.

United States Court of Appeals, Second Circuit.

Argued April 28, 1982.

Decided Oct. 6, 1982.

Frank J. Dolce, Buffalo, N. Y. (Collins, Collins & Di Nardo, P. C., Buffalo, N. Y., on the brief), for plaintiff-appellant.

Peter P. Paravati, Utica, N. Y. (Peter P. Paravati, P. C., Utica, N. Y., on the brief), for defendants-appellees.

Before MANSFIELD and KEARSE, Circuit Judges, and CABRANES, District Judge. ^*

KEARSE, Circuit Judge:

Plaintiff Clara Duchow appeals from a final judgment of the United States District Court for the Western District of New York, John T. Curtin, Chief Judge, dismissing her suit against defendants New York State Teamsters Conference Pension and Retirement Fund ("the Fund") and its individual trustees seeking a declaratory judgment that she is entitled to certain benefits from a pension fund of which her late husband, Herman Duchow ("Duchow"), was a member. The district court denied plaintiff's motion for partial summary judgment and granted defendants' motion for summary judgment on the ground that Duchow's right to pension benefits had not vested. We conclude that the Employee Retirement Income Security Act ("ERISA" or "the Act"), 29 U.S.C. §§ 1001 et seq. (1976), requires that pension benefits become vested upon an employee's attainment of "normal retirement age," as defined in the Act, and that Duchow's rights had vested. We therefore reverse the judgment of the district court and remand for entry of partial summary judgment in favor of plaintiff and for determination of the amount of benefits to which she is entitled.

BACKGROUND

The relevant facts are not in dispute. Duchow became an employee of Southland Frozen Foods, Inc. ("Southland"), on September 1, 1963. Subsequently, Southland entered into a collective bargaining agreement with Local Union No. 558 of the International Brotherhood of Teamsters. As a result, on February 1, 1969, Duchow became a member of the pension plan ("the Plan") established by the Fund. In February 1977, at the age of 69, Duchow applied to the Board of Trustees of the Fund for pension benefits. His application was denied. On May 31, 1977, Duchow terminated his employment with Southland. He thereafter returned to Southland and was employed there in January and February of 1979. During this period Duchow reapplied for pension benefits. This application too was denied.

In denying Duchow's applications, the Trustees took the position that Duchow had no vested pension rights because he had not fulfilled the Plan's service requirements. They relied on Plan provisions that, in order to receive pension benefits, an employee must have attained either

(a) Age 60 with 15 or more years of past and future service combined, or

(b) Age 65 with 10 or more years of future service.

"Past service" meant the period of employment prior to the date the employer became The present action was commenced by Duchow in 1979. Upon his death, plaintiff, as his administratrix and widow, was substituted for him. She seeks to recover for benefits to which Duchow was entitled during his lifetime, as well as survivor benefits to which she is personally entitled. Her entitlement to survivor benefits depends on the eligibility of Duchow to receive benefits. The district court granted summary judgment in favor of defendants on the ground that Duchow had not met the Plan's service requirements. Plaintiff contends that, notwithstanding the Plan's service requirements, ERISA required that Duchow's right to accrued pension benefits be recognized as vested on February 1, 1979, the tenth anniversary of his joining the Plan. For the reasons below, we agree.

obligated to make contributions to the Plan-in Duchow's case, February 1, 1969; "future service" meant the period of employment following that date. As of February 1979, Duchow had 5.4 years of past service and 8.9 years of future service, for a total of 14.3 years. Thus, although he was over the age of 65, Duchow concededly met neither of the Plan's alternative requirements with respect to periods of service.

DISCUSSION

ERISA, enacted in 1974, established a comprehensive federal regulatory scheme governing private retirement pension plans. The Act was passed after congressional investigations indicated that regulation was necessary in order to curb abuses of such plans. See 29 U.S.C. § 1001 (1976); see also Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 510, 101 S.Ct. 1895, 1899, 68 L.Ed.2d 402 (1981); Nachman Corp. v. Pension Benefit Guaranty Corp., 446 U.S. 359, 362, 100 S.Ct. 1723, 1726, 64 L.Ed.2d 354 (1980). More specifically, Congress found, inter alia, "that owing to the termination of plans before requisite funds have been accumulated, employees and their beneficiaries have been deprived of anticipated benefits...." 29 U.S.C. § 1001(a). ERISA was designed to reduce, by various means, the number of pension benefits lost.

A. Minimum Vesting Requirements Under ERISA

As one method of accomplishing the goal of decreasing the number of lost pensions, § 203 of ERISA established certain minimum vesting requirements that all covered plans must meet. Section 203(a) provides, in pertinent part, as follows:

Minimum vesting standards

(a) Nonforfeitability requirements

Each pension plan shall provide that an employee's right to his normal retirement benefit is nonforfeitable upon the attainment of normal retirement age and in addition shall satisfy the requirements of paragraphs (1) and (2) of this subsection.

(1) A plan satisfies the requirements of this paragraph if an employee's rights in his accrued benefit derived from his own contributions are nonforfeitable.

(2) A plan satisfies the requirements of this paragraph if it satisfies the requirements of subparagraph (A), (B), or (C).

(A) A plan satisfies the requirements of this subparagraph if an employee who has at least 10 years of service has a nonforfeitable right to 100 percent of his accrued benefit derived from employer contributions.

(B) A plan satisfies the requirements of this subparagraph if an employee who has completed at least 5 years of service has a nonforfeitable right to a percentage of his accrued benefit derived from employer contributions which percentage is not less than the percentage determined under the following table: (table omitted).

(C)(i) A plan satisfies the requirements of this subparagraph if a participant who is not separated from the service, who has completed at least 5 years of service, and with respect to whom the sum of his age and years of service equals or exceeds 45, has a nonforfeitable right to a percentage of his accrued benefit derived from employer contributions (ii) Notwithstanding clause (i), a plan shall not be treated as satisfying the requirements of this paragraph unless any participant who has completed at least 10 years of service has a nonforfeitable right to not less than 50 percent of his accrued benefit derived from employer contributions and to not less than an additional 10 percent for each additional year of service thereafter.

determined under the following table: (table omitted).

29 U.S.C. § 1053(a) (1976). Thus, under § 203(a)(2), a plan is required to adopt one of three vesting standards linked to the employee's years of service. There is no question that the Plan at issue here meets the requirements of § 203(a)(2). It provides for "100% vesting after 10 years of future service, that is, years in which contributions are made on behalf of the employee," and thereby complies with the standard set in subparagraph (A). Defendants contend that no more is required.

Plaintiff argues, however, that the first clause of § 203(a) imposes an additional minimum vesting requirement. That clause states that "(e)ach pension plan shall provide that an employee's right to his normal retirement benefit is nonforfeitable upon the attainment of normal retirement age ...." 29 U.S.C. § 1053(a). "Normal retirement age" is defined in § 3(24) of the Act as

the earlier of-

(A) the time a plan participant attains normal retirement age under the plan, or

(B) the later of-

(i) the time a plan participant attains age 65, or

(ii) the 10th anniversary of the time a plan participant commenced participation in the plan.

29 U.S.C. § 1002(24). Reading "10th anniversary" in accordance with its normal meaning, plaintiff contends that in order to comply with § 203(a) a plan not only must provide for vesting upon completion of a certain period of service, but also must provide for vesting at a certain time regardless of the employee's years of service.

We agree that § 203(a)'s provisions with regard to employer contributions are properly interpreted as imposing two distinct types of minimum vesting requirements, one of which is independent of the employee's years of service. ¹ We reach this conclusion on the basis of the statutory language, legislative history, and declared purposes of ERISA.

First, the elaborately conjunctive language of § 203(a), requiring that a plan "shall provide ... nonforfeitab(ility) upon the attainment of normal retirement age and in addition shall satisfy the requirements of paragraph ( ) ... (2) of this subsection" (emphasis added), suggests strongly that two sets of requirements are imposed. The differing thrusts of the language of paragraph (2) and the first clause of § 203(a) provide further support for this view. Paragraph (2) provides three alternative standards, each of which deals with the plan's service requirements;...