Wolf v. National Shopmen Pension Fund

• Decision Date: 01 March 1984
• Docket Number: No. 83-1033,83-1033
• Citation: 728 F.2d 182
• Parties: 100 Lab.Cas. P 10,908, 100 Lab.Cas. P 10,912, 5 Employee Benefits Ca 1257 WOLF, Dorothy, G. v. NATIONAL SHOPMEN PENSION FUND; Shopmen's Local 548; Gehringer, Richard H. Appeal of NATIONAL SHOPMEN PENSION FUND.
• Court: U.S. Court of Appeals — Third Circuit

Page 182

728 F.2d 182

100 Lab.Cas. P 10,908, 100 Lab.Cas. P 10,912,

5 Employee Benefits Ca 1257

WOLF, Dorothy, G. v. NATIONAL SHOPMEN PENSION FUND; Shopmen's Local 548;

Gehringer, Richard H.

Appeal of NATIONAL SHOPMEN PENSION FUND.

No. 83-1033.

United States Court of Appeals, Third Circuit.

Argued Oct. 24, 1984.

Decided Feb. 17, 1984.

Petition for Rehearing and Rehearing

In Banc Denied March 1, 1984.

Stephen C. Richman, argued, Andrew L. Markowitz, Markowitz & Richman, Philadelphia, Pa., for appellant.

Thomas F. Traud, Jr., argued, Roberts, Traud, Wallitsch & Corkery, Allentown, Pa., for appellee.

Before GIBBONS, GARTH and HIGGINBOTHAM, Circuit Judges.

OPINION OF THE COURT

A. LEON HIGGINBOTHAM, Jr., Circuit Judge.

This case involves the National Shopmen Pension Fund's appeal of a district court order granting the plaintiff Dorothy G. Wolf's claim to pension benefits as the designated beneficiary of her deceased husband. This claim was denied by the Trustees of the Pension Fund. Because we believe that the Pension Fund's denial was arbitrary and capricious, we will affirm the district court order granting those benefits.

I.

Plaintiff's deceased husband, William G. Wolf, was employed by Lehigh Structural Steel Company ("the Company") for over 40 years. He suffered two heart attacks in January and February of 1978. His last day of work was January 26, 1978. Prior to January, 1978, Wolf was an active employee of the Company and a member of the local union. In the summer of 1978, Wolf and members of his family had several meetings with Richard H. Gehringer, the President of the local union, concerning potential benefits payable to Mr. Wolf as a participant in the National Shopmen Pension Fund ("the Pension Fund").

The Pension Fund is a jointly administered trust fund established pursuant to Section 302(c)(5) of the Labor Management Relations Act, 29 U.S.C. Sec. 186(c)(5) (1976). The Pension Fund is administered by a Board of Trustees embracing an equal number of employer and union representatives. In administering the Pension Fund, the Board of Trustees must comply with the Rules and Regulations of the National Shopmen Pension Plan ("Pension Plan" or "the Plan").

In August of 1978, Mr. Wolf completed a pension application on a form provided by the Pension Fund. On the second page of the application Wolf signed a "WAIVER OF SPOUSE'S 50% PENSION OPTION." On December 1, 1978, the Acting Fund Administrator, on behalf of the Trustees, wrote to Mr. Wolf advising him that his application for a disability pension was approved; however, Mr. Wolf had died on November 22, 1978. Because Mr. Wolf's disability pension application contained this signed Waiver of Spouse's 50% Pension Option, the Fund advised Mrs. Wolf that she was entitled to no pension benefits following the death of her husband. Instead, Mrs. Wolf was entitled only to receive an amount covering the period between the submission of the pension application and its approval by the Board of Trustees. This amount was $304.00 a month for the already passed months of August, September, October and November of 1978 for a total of $1,216.00.

On September 21, 1979, Mrs. Wolf filed suit against the Pension Fund, Shopmen's Local Union 548 ("Local Union"), and Richard H. Gehringer, the Union's President, in Pennsylvania State Court. Mrs. Wolf alleged in her complaint that Mr. Gehringer, acting as an agent of the Pension Fund, negligently failed to process properly the pension application form executed by her husband. Mrs. Wolf did not contend that the Pension Fund itself was independently guilty of negligence or bad faith in its handling of the application. On October 2, 1979, the suit was removed to the United States District Court for the Eastern District of Pennsylvania. The defendants moved for and were granted summary judgment because Mrs. Wolf had not exhausted internal union remedies by failing to request a hearing under Section 7.04 of the Plan. 512 F.Supp. 1182.

Mrs. Wolf returned to the Pension Fund to exhaust internal union remedies pursuant to Section 7.04. The Trustees considered the merits of Mrs. Wolf's appeal of the Pension Fund's denial of pension benefits unpersuasive; and therefore, it denied her claim in an undated opinion.

Having sought and been denied the additional pension benefits by the Pension Fund pursuant to the Plan's internal union appeals procedure, plaintiff again instituted an action in federal district court. As before, she sought what she had been denied--the pension benefits to which she would have been entitled, if the Pension Fund had not considered Mr. Wolf's waiver of spouse's 50% pension option effective.

Pursuant to the rules of the district court, arbitrators considered this dispute and, on November 22, 1982, entered an arbitration award in favor of the plaintiff, but only against the Pension Fund. The Local Union and Richard Gehringer defeated plaintiff's claim against them. The arbitrators found that the waiver signed on page two of the application was ineffective to eliminate a payment to the plaintiff of 50% of the amount Mr. Wolf would have received had he not elected to execute the waiver. The arbitrators also held, however, that they were unable to arrive at a precise figure because the evidence presented did not enable them to do so.

The plaintiff appealed the arbitrators' decision to the district court. In a sound opinion mindful of its limited scope of review of the Pension Fund's determination, the district court found in favor of Mrs. Wolf and against the Pension Fund; the district court agreed with the arbitrators that the waiver executed by Mr. Wolf was ineffective. The district court also found in favor of the union and Mr. Gehringer. Because the record before the district court was complete, it was able to determine the dollar amount of plaintiff's award against the Pension Fund. The defendant Pension Fund now appeals from the order of the district court finding it liable to Mrs. Wolf.

The Pension Fund claims first, that plaintiff's claim is not within the jurisdiction of the federal courts because plaintiff failed to exhaust internal union remedies and second, that the waiver executed by plaintiff's husband was effective.

II.

Federal jurisdiction over this type of claim is based on Section 502(a), 29 U.S.C. Sec. 1132(a) (1976), the civil enforcement provision of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. Secs. 1001-1381 (1976). Section 502(a) provides, in pertinent part, that

"[a] civil action may be brought--(1) by a participant or beneficiary--(B) to recover benefits due to [her] under the terms of [her] plan, to enforce [her] rights under the terms of the plan, or to clarify [her] rights to future benefits under the terms of the plan...."

29 U.S.C. Sec. 1132(a)(1)(B). However, the federal courts have generally not entertained such an action where the party bringing the action has failed to exhaust administrative remedies. See Kross v. Western Electric Co., Inc., 701 F.2d 1238 (7th Cir.1983); Challenger v. Local Union No. 1 of the International Bridge, Structural and Ornamental Iron Workers, 619 F.2d 645 (7th Cir.1980); Amato v. Bernard, 618 F.2d 559 (9th Cir.1980).

Indeed, the district court dismissed plaintiff's initial action because she had failed to exhaust internal union remedies, specifically, Section 7.04 of the Plan's internal appeals procedure which provides in pertinent part:

A Participant whose application for benefits under this Plan has been denied, in whole or in part, is to be provided with adequate notice in writing setting forth the specific reasons for such denial, and shall have the right to appeal the decision, by written request filed with the Trustees within 180 days after receipt of such notice. The appeal shall be considered and decided by the Trustees. The decision shall be communicated to the claimant within 90 days after receipt of all pertinent evidence.

Appendix ("App.") at 44a. The plaintiff cured this defect, however, by appealing to the Pension Fund pursuant to Section 7.04 of the Plan. In that appeal she requested the Board of Trustees to correct the claimed error of having approved Mr. Wolf's application for a disability pension. That request was denied. It was only after Mrs. Wolf had been denied by the Pension Fund the additional benefits she sought that she initiated the second action before the district court.

Although defendant concedes that Mrs. Wolf "did ultimately appeal to the Trustees pursuant to this procedure," it contends that "plaintiff never raised any issue during her appeal concerning the validity of the waiver executed by her husband of the spouse 50% option." Brief for Appellant at 18. Thus, defendant concludes plaintiff should not be permitted to proceed on the alternative theory that the 50% waiver was ineffective because it would strip from the Trustees "the opportunity to resolve disputes concerning a participant's rights to pension benefits." Id. at 18-19. We disagree with the defendant Pension Fund's argument and conclusion. Because plaintiff, pursuant to section 7.04, submitted the appeal to the Board of Trustees who acted upon and denied her appeal, we conclude that she exhausted her internal union remedies.

Section 502(a) of ERISA does not require either issue or theory exhaustion; it requires only claim exhaustion. 29 U.S.C. Sec. 1132(a). The Pension Fund cites no case, nor are we aware of any case which holds that a district court cannot decide a claim relying on a theory different from that presented to the Trustees of a Pension Fund. All of the cases with which we are familiar concern themselves only with whether the internal union remedies have been exhausted before finding federal jurisdiction appropriate.

In this case, the Trustees were presented with plaintiff's claim to the pension benefits to which her husband would have been entitled but for the Pension Fund's finding that the ...