Price v. Bd. of Trs. of the Ind. Laborer's Pension Fund

• Decision Date: 09 May 2013
• Docket Number: No. 11–4126.,11–4126.
• Citation: 707 F.3d 647
• Parties: James R. PRICE, Plaintiff–Appellee, v. BOARD OF TRUSTEES OF the INDIANA LABORER'S PENSION FUND; Indiana Laborer's Pension Fund, Defendants–Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

707 F.3d 647

James R. PRICE, Plaintiff–Appellee,

v.BOARD OF TRUSTEES OF the INDIANA LABORER'S PENSION FUND; Indiana Laborer's Pension Fund, Defendants–Appellants.

No. 11–4126.

United States Court of Appeals, Sixth Circuit.

Argued: Dec. 6, 2012.

Decided and Filed: Feb. 15, 2013.

Rehearing En Banc Denied May 9, 2013.^*

ARGUED:R. Gary Winters, McCaslin, Imbus & McCaslin, Cincinnati, Ohio, for Appellants. Tony C. Merry, Law Offices of Tony C. Merry, LLC, Worthington, 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, Worthington, Ohio, for Appellee.

Before: SUTTON and McKEAGUE; Circuit Judges; and JONKER, District Judge. ^*

McKEAGUE, J., delivered the opinion of the court, in which SUTTON, J., joined. JONKER, D.J. (pp. 652–55), delivered a separate dissenting opinion.

OPINION

McKEAGUE, Circuit Judge.

James Price filed an ERISA suit against the Board of Trustees of the Indiana Laborer's Pension Fund and the Pension Fund itself after his disability benefits were discontinued. In a previous published opinion, Price v. Bd. of Trs. of Ind. Laborer's Pension Fund, 632 F.3d 288 (6th Cir.2011), we reversed a decision of the district court after holding that the district court applied the wrong standard of review. We instructed the district court to review the Board's decision regarding the interpretation of the terms of the Plan and the termination of Price's benefits under an arbitrary and capricious standard. On remand, the district court failed to look to the terms of the plan but instead found that because the Board's decision letter did not discuss whether the benefits vested, the Board's decision was arbitrary and capricious.

For the reasons set forth herein, we reverse the decision of the district court and remand with instructions to grant judgment in favor of the Board.

BACKGROUND

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.¹ 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 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 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 7A.5 (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 became eligible for early retirement in September 2012.

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 violatedERISA 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, 2:07–cv–0933, 2009 WL 799639, at *4 (S.D.Ohio Mar. 24, 2009). In separate orders, the district court ordered the Fund to reinstate Price's benefits and pay Price's attorney's fees. The Board and the Fund appealed the decision.

We reversed. Price v. Bd. of Trustees of the Ind. Laborer's Pension Fund, 632 F.3d 288 (6th Cir.2011). We initially determined that the Yard–Man inference and the standard for vesting from Sprague v. General Motors Corp., 133 F.3d 388, 400 (6th Cir.1998) (en banc), did not apply to this case. Price, 632 F.3d at 294–95. We then held that the district court erred by reviewing the Board's decision de novo. Because the Board had discretion to interpret the plan, the district court should have reviewed the Board's decision under the arbitrary and capricious standard of review. This review “necessarily entails looking to the terms of the Plan to determine if Price's disability benefits vested, as it is the Plan itself that sets forth the terms by which benefits are conferred, vested, or terminated.” Id. at 296. We remanded the case for consideration of the reasonableness of “the Board's decision regarding the interpretation of the terms of the Plan and the resulting termination of Price's benefits using the arbitrary and capricious standard.” Id. at 298.

On remand, the district judge set a new briefing schedule, the parties again made cross-motions for summary judgment, and the district judge again granted judgment in favor of Price. The district judge briefly reviewed the majority and concurring opinions from our prior decision before stating, “The problem that this Court now faces is that the Board's decision did not include a statement of its reasoning.” R. 62, Dist. Ct. Op. & Order at 4, Page ID# 533. The court then briefly addressed the lack of reasoning found in the Board's decision and termination letters, and based on the lack of reasoning in these letters, the district judge concluded that the Board's decision was arbitrary and capricious. The court then found that “[p]laintiff is clearly entitled to a retroactive award of benefits.” Id. at 6. The district court concluded that it would be unreasonable for the Board to find that the benefit had not vested under ERISA and under the language of the Plan “[f]or the reasons set forth in the Sixth Circuit's concurring opinion.” Id. At no point did the district judge look to the terms of the plan.

The Board and the Fund appeal the district court's decision and argue that the Board's interpretation was reasonable. We begin by outlining the standard of review, and then turn to whether the Board's decision was arbitrary and capricious based on the Board's interpretation of the terms of the Plan and the resulting termination of Price's benefits.

STANDARD OF REVIEW

We review the district court's grant of summary judgment de novo. Price, 632 F.3d at 291. “Summary 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.” Id. at 291–92 (internal quotation marks and modifications omitted).

As we determined in our prior decision, the Plan gives the Board authority to interpret the terms of the Plan and make benefits determinations. Therefore, we review the Board's decision under the arbitrary and capricious standard of review. “A plan administrator's decision will not be deemed arbitrary and capricious so long as ‘it is possible to offer a reasoned explanation, based on the evidence, for a particular outcome.’ ” Haus v. Bechtel Jacobs Co., LLC, 491 F.3d 557, 561–62 (6th Cir.2007) (quoting Davis v. Ky. Fin. Cos. Ret. Plan, 887 F.2d 689, 693 (6th Cir.1989)).

The proper inquiry then is whether the Board's decision was arbitrary and capricious. When the district court decided the case below, it engaged in the wrong inquiry. The district court asked whether the Board's decision letters were arbitrary and capricious because they lacked reasoning. The Board decided that Price's benefits could be terminated through amendment, a decision that necessarily required the Board to determine that Price's benefits had not vested. If this interpretation of the Plan was reasonable, then the Board's decision was not arbitrary and capricious, and the Board would be entitled to...