Batchelor v. International Broth. of Elec. Workers Local 861 Pension and Retirement Fund

• Decision Date: 20 July 1989
• Docket Number: No. 88-4299,88-4299
• Citation: 877 F.2d 441
• Parties: 112 Lab.Cas. P 11,364, 11 Employee Benefits Ca 1855 Robert J. BATCHELOR, Plaintiff-Appellee, v. INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS LOCAL 861 PENSION AND RETIREMENT FUND, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 441

877 F.2d 441

112 Lab.Cas. P 11,364, 11 Employee Benefits Ca 1855

Robert J. BATCHELOR, Plaintiff-Appellee, v. INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS LOCAL 861

PENSION AND RETIREMENT FUND, Defendant-Appellant.

No. 88-4299.

United States Court of Appeals, Fifth Circuit.

July 20, 1989.

Louis L. Robein, Jr., Gardner, Robein & Healey, Metairie, La., for defendant-appellant.

Edward J. Fonti, Lake Charles, La., D. Kent Savoie, Sulphur, La., for plaintiff-appellee.

Appeal from the United States District Court for the Western District of Louisiana.

Before THORNBERRY, GEE and POLITZ, Circuit Judges.

THORNBERRY, Circuit Judge:

The present dispute arises under 29 U.S.C. Secs. 1001 et seq. (ERISA). Defendant/appellant International Brotherhood of Electrical Workers Local 861 Pension and Retirement Fund ("the Pension Fund") appeals the district court's holding that the Trustees of the Pension Fund ("the Trustees") miscalculated plaintiff/appellee Robert Batchelor's ("Batchelor") past service credit. In addition, Batchelor brings a claim for attorney's fees.

I. FACTS.

From 1946 through 1959, Batchelor performed maintenance work at Cities Service Refining Corporation ("Cities Service"). He obtained "Construction A membership" in the International Brotherhood of Electrical Workers Local 861 ("IBEW Local 861") in February 1947. From 1959 through 1963, Batchelor sought and obtained referrals through IBEW Local 861 for construction work with companies that later, in 1963, participated in an agreement creating the Pension Fund. ¹ Cities Service has never contributed to the Pension Fund.

The Pension Fund calculates a participant's benefits based on the number of years of past and future service. Future service is the number of years of service after 1963--the year the Pension Fund was created--with contractors who contributed to the Pension Fund. The parties agree that Batchelor is entitled to 18.5 years of future service. Past service credit refers to years of work through 1963, i.e. before the Pension Fund existed. The parties disagree as to the requirements for receiving past service credit. Batchelor contends that past service credit is based on union membership. The Trustees argue that past service credit is only available for years of work with companies that ultimately contributed to the Pension Fund. ²

Batchelor retired in November 1983 claiming a total of 35.5 years of past and future service credit. In January 1984, the Chairman of the Board of Trustees informed Batchelor that the Trustees had not accepted credit for Batchelor's twelve years with Cities Service. ³ Batchelor then requested a formal hearing before the Board of Trustees. In April 1984, the Trustees held a hearing to consider Batchelor's appeal. The Trustees again refused to credit Batchelor for the twelve years he was a union member employed by Cities Service. Absent the credit for these years, Batchelor's monthly retirement benefit was approximately $200 less than he expected.

The Trustees' decision was based on the fact that (1) the provision governing past service credit was never interpreted to allow people in Batchelor's position to receive past service credit for work with companies that were not signatories to the agreement creating the Pension Fund; (2) Cities Service has never paid into the Pension Fund so Batchelor should not receive credit for the years with Cities Service; (3) the language in the 1976 Pension Plan ⁴ concerning recovery of lost past service credits requires Construction A membership and actual work in the construction industry; (4) it would be illegal to allow union membership alone to be the sole factor in determining past service credit; and (5) Batchelor could not provide evidence that other people in his position had received past service credit for maintenance years.

In February 1985, Batchelor brought suit against the Pension Fund contesting the denial of his twelve years past service credit. The district court rendered judgment in Batchelor's favor on the grounds that the language of the 1976 Pension Plan unambiguously allowed past service credit to people in Batchelor's position and that the Trustees' interpretation was arbitrary and capricious.

II. STANDARD OF REVIEW.

The Supreme Court recently held that a "denial of benefits challenged under 29 U.S.C. Sec. 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire and Rubber Co. v. Bruch, --- U.S. ----, 109 S.Ct. 948, 956, 103 L.Ed.2d 80 (1989). If the administrator or fiduciary has discretionary authority, the reviewing court should apply an abuse of discretion standard. Id.

In light of Bruch, we must determine whether the Trustees of the Pension Plan have discretionary authority to determine Batchelor's past service credits. If the Trustees have such authority, we must review their decision for an abuse of discretion. Under the terms of the Pension Plan, the Trustees "have full and exclusive authority to determine all questions of coverage and eligibility.... They ... have full power to construe the provisions of this Agreement, [and] the terms used herein...." Furthermore, the Trustees have the authority to "interpret the Plan and ... determine all questions arising in the administration, interpretation and application of the Plan." These provisions give broad discretionary authority to the Trustees. We, thus, review the Trustees' interpretation of the provisions governing past service credit for an abuse of discretion. See Lowry v. Bankers Life and Casualty Retirement Plan, 865 F.2d 692, reh'g denied 871 F.2d 522, 524 (5th Cir.1989) (holding that where a plaintiff contested the Committee's interpretation of terms of the Plan and the Plan Committee had "permissive authority ... to 'interpret and construe' the Savings Plan and the power 'to determine all questions of eligibility and status under the Plan,' " the proper standard of review was abuse of discretion).

III. THE LEGALITY OF THE 1982 AMENDMENT.

Before reviewing the Trustee's interpretation for abuse of discretion, we must address a dispute concerning the validity of a 1982 amendment to the past service provision of the 1976 Pension Plan. In 1976, Article II, Section 3(1) of the Pension Plan provided that "[e]ach employee who is a participant on the Effective Date shall receive 1 unit of past service credit for each whole year of continuous and unbroken membership in the Union prior to the effective date." ⁵

This provision was amended in 1982, becoming Article III, section 3.10, to explicitly limit past service credit to a participant who "either worked in Covered Employment or was available for work." ⁶ Under Article 3.09 of the 1982 Pension Plan, "Covered Employment" is "employment which, if performed subsequent to ... [1963], would have resulted in a contribution to the Pension Fund." The effect of this definition is to limit past service credit to work done for companies that have contributed to the Pension Fund. Because Cities Service did not contribute to the Pension Fund and because Batchelor was not available to work for a contributor to the Pension Fund, under the terms of the 1982 Pension Plan, Batchelor cannot receive credit for his years with Cities Service. ⁷

A. Divesting.

Batchelor argues that under the 1976 Pension Plan, he was entitled to past service credit for his years at Cities Service and that the 1982 amendment divested him of his right to these credits in violation of ERISA. Batchelor relies on Fentron Industries Inc. v. National Shopmen Pension Fund, 674 F.2d 1300 (D.C.Cir.1984), which held that a Pension Plan amendment violated ERISA because it divested participants without giving them an opportunity to select early retirement to avoid the divesting amendment. Divestment refers to the complete loss of the right to benefits. In the instant case, Batchelor was not denied his right to past service credit. In fact, the Trustees credited Batchelor with five years of past service for his work with contributing contractors from 1959 through 1963. Thus, Batchelor was not divested of his right to past service credit.

B. Reducing Benefits.

If the 1982 amendment had any effect at all, it may have reduced the level of benefits to which Batchelor was entitled by decreasing his years of credit. ⁸ 29 U.S.C. Sec. 1082(c)(8)(C) provides that:

[n]o amendment ... which reduces the accrued benefits of any participant shall take effect unless the plan administrator files a notice with the Secretary [of Labor] notifying him of such amendment and the Secretary [of Labor] has approved such amendment or, within 90 days after the date on which such notice was filed, failed to disapprove such amendment.

See also Hoover v. Cumberland, MD AREA Teamsters Pension Fund, 756 F.2d 977, 984 (3rd Cir.), cert. denied 474 U.S. 845, 106 S.Ct. 135, 88 L.Ed.2d 111 (1985) (holding that ERISA "flatly prohibits reductions of accrued benefits" unless the Secretary of the Treasury grants a request to amend benefits); Meagher v. IAM Pension Plan, 856 F.2d 1418, 1423 (9th Cir.1988), cert. denied --- U.S. ----, 109 S.Ct.1943, 104 L.Ed.2d 414 (1989) (finding inoperative an amendment reducing accrued benefits that was never approved by the Secretary of the Treasury). ⁹ The administrator of the Pension Fund never notified the Secretary of Labor concerning the amendment to the past service provision.

The Trustees argue that the 1982 amendment did not alter any past understandings or practices concerning the calculation of past service credit and that, therefore, there was no obligation to inform the Secretary of Labor. They urge that the amendment clarified the existing interpretation that a participant could only receive past service credit for years worked for a construction industry contractor who was a signatory to...