Allbaugh v. Cal. Field Ironworkers Pension Trust

• Decision Date: 18 October 2016
• Docket Number: 2:12-cv-00561-JAD-GWF
• Parties: Donald Allbaugh, individually and on behalf of all similarly situated, Plaintiff v. California Field Ironworkers Pension Trust; Board of Trustees of the California Field Ironworkers Pension Trust, Plan Administrator of the California Field Ironworkers Pension Trust, Defendants
• Court: U.S. District Court — District of Nevada

Donald Allbaugh, individually and on behalf ofall similarly situated, Plaintiff v. California Field Ironworkers Pension Trust; Board of Trustees of the California FieldIronworkers Pension Trust, Plan Administrator of the California FieldIronworkers Pension Trust, Defendants

2:12-cv-00561-JAD-GWF

UNITED STATES DISTRICT COURT DISTRICT OF NEVADA

October 18, 2016

Order Denying Allbaugh's Motion for Reconsideration; Granting the Defendants' Motion for Summary Judgment in Part; Denying Allbaugh's Motion for Summary Judgment; Granting the Defendants' Motion to Seal in Part; Granting Allbaugh's Motion to Supplement; and Referring this Case to a Magistrate Judge for Mandatory Settlement Conference

[ECF Nos. 137, 142, 144, 145, 150, 178]

This is an action for withheld benefits, equitable relief, and statutory penalties under the Employee Retirement Income Security Act ("ERISA"). Donald Allbaugh has been a participant in the California Field Ironworkers Pension Trust's pension plan since 1970. He reached normal retirement age under the plan (age 65) in August 2007. He then continued working as a safety manager for the same employer and also part time as an instructor for the union until he retired two years later. Allbaugh did not receive benefit payments while he continued to work past normal retirement age, but he did continue to accrue pension credits. In calculating Allbaugh's monthly benefit payment, the plan's administrator interpreted the plan and determined that Allbaugh's post-normal-retirement-age employment required his benefit payments to be permanently withheld during the months that Allbaugh had been engaged in that employment. Thus, the administrator did not actuarially increase the amount of accrued benefit that Allbaugh had earned at normal retirement age for each month that his benefits were withheld.

Allbaugh sues the California Field Ironworkers Pension Trust and the Board of Trustees on behalf of himself and similarly situated workers, claiming that he is entitled to greater pension benefits than he is currently receiving to account for the deferred benefits that he accumulated after reaching retirement age. He separates his claims into five counts and seeks to recover withheld benefits under 29 U.S.C. § 1132(a)(1)(B) in Counts 1, 2, and 4, equitable relief under 29 U.S.C. § 1132(a)(3) in Counts 1-3, and statutory penalties under 29 U.S.C. § 1132(c)(1)(B) in Count 5.

I certified a class of participants and their eligible beneficiaries to pursue Counts 2 and 3.¹ But I denied certification of a separate class of participants who worked after normal retirement age and whose benefits are or had been suspended without receiving a suspension-of-benefits notice ("Class 1") to pursue Counts 1, 3, and 4 because it faltered at FRCP 23(a)'s commonality and typicality prerequisites.² Allbaugh now moves me to reconsider that denial, arguing that it is clearly erroneous and that newly discovered evidence warrants certification.³ Because Allbaugh has not left me with a definite and firm conviction that a mistake has been committed, and the newly discovered evidence is not relevant to the reasons that I found Class 1 unsuitable for certification, I deny his motion.

The parties also move for summary judgment on all five of Allbaugh's claims.⁴ I grant the defendants summary judgment on the portion of Count 1 alleged under § 1132(a)(1)(B) because, as I held more than two years ago in this case, recovery of withheld benefits is not a viable remedy for a plan's failure to provide a suspension notice.⁵ As for the other denial-of-benefit claims (Counts 2 and 4), I review them de novo because the defendants have not established that the plan's terms unambiguously grant them discretion to make eligibility determinations or to interpret the plan, and I find that triable issues of fact preclude summaryjudgment. I deny the defendants' motion to summarily adjudicate the claims seeking equity under § 1132(a)(3) (Counts 1, portions of 2, and 3) as duplicative of the denial-of-benefit claims under § 1132(a)(1)(B) because pleading alternative theories is permitted. But I grant summary judgment on the portion of Count 5 seeking statutory remedies for the defendants' failure to timely furnish Allbaugh copies of actuarial tables because statutory relief is not legally available for that delay.

Allbaugh also moves for leave to supplement his briefs to discuss a new ERISA decision from the Ninth Circuit,⁶ and the defendants move to seal the declaration of Leanne Vance and exhibit 1 thereto.⁷ I grant both Allbaugh's motion for leave to supplement and the defendants' motion to seal exhibit 1.⁸ And, finally, I refer this case to a Magistrate Judge to schedule a mandatory settlement conference.

Analysis

I. Motion to Amend Class Certification Order

Allbaugh moves for reconsideration of my order denying certification for his proposed Class 1 under FRCP 23, which provides that orders granting or denying class certification "may be altered or amended before final judgment."⁹ While Rule 23 authorizes courts to alter or amend class-certification orders, it does not supply the reconsideration standard. Because they are interlocutory, class-certification orders fall under the court's "inherent power to reconsider an interlocutory order for cause, so long as [it] retains jurisdiction."¹⁰ Cause for reconsideration may exist if "(1) there is newly discovered evidence that was not available when the original motion or response was filed, (2) the court committed clear error or the initial decision wasmanifestly unjust, or (3) if there is an intervening change in controlling law."¹¹

The defendants argue that I should reject Allbaugh's reconsideration motion because he does not invoke the correct legal standard.¹² But I reach its merits because Allbaugh argues that: (1) newly discovered evidence of the defendants' systematic failure to provide suspension-of-benefits notices to participants when they reached normal retirement age warrants certification of Class 1; and (2) I committed clear error by (a) relying on the preamble to the DOL's regulation, (b) failing to consider that proof of reliance is not required in this circumstance, and (c) finding that the failure to send a suspension-of-benefits notice does not give rise to a substantive claim for withheld benefits. I address these arguments in reverse order and, because they do not concern the deficiency that I found with Count 4,¹³ I limit my analysis to Counts 1 and 3.

A. Allbaugh has not demonstrated that the denial of class certification was based on a clearly erroneous understanding of when employment qualifies as § 203(a)(3)(B) service.

Allbaugh's theory under Count 1 is that he suffered an unlawful forfeiture when the plan suspended benefit payments to participants who continued to work past normal retirement age without first notifying them that it was suspending their benefits. Allbaugh claims that he and the members of Class 1 are entitled to recover the actuarial equivalent of the unlawfully withheld benefits plus any additional benefits that accrued under 29 U.S.C. § 1132(a)(1)(B) or equitable relief under § 1132(a)(3).

ERISA and the implementing regulations recognize that benefit payments often will be deferred.¹⁴ ERISA requires pension plans to "provide that an employee's right to his normalretirement benefit is nonforfeitable upon the attainment of normal retirement age. . . ."¹⁵ Thus, the general rule under ERISA is that an employer must provide an actuarial increase for the time that an employee delays receipt of benefits past normal retirement age to reflect that his retirement will be shorter.¹⁶ An exception to this general rule—when an actuarial increase is not required and an unlawful forfeiture does not occur—is when the employee's benefits are suspended under 29 U.S.C. § 1053(a)(3)(B),¹⁷ which "allows plans to contain provisions requiring the suspension of benefit payments where an employee works in certain jobs after his . . . normal retirement date."¹⁸ "Employees who fall in this category are commonly referred to being in 'Section 203(a)(3)(B) service.'"¹⁹ The Department of Labor's ("DOL's") implementing regulation states that "the employment of an employee subsequent to the time the payment of benefits commenced or would have commenced if the employee had not remained in or returned to employment results in section 203(a)(3)(B) service . . . ."²⁰

Allbaugh does not dispute that he continued to work in what constitutes § 203(a)(3)(B) service after he attained normal retirement age. He contends instead that, because the plan failed to provide him with notice that it was suspending his benefit payments, his employment did not qualify as § 203(a)(3)(B) service. Allbaugh's theory is viable only if the sending of asuspension-of-benefits notice is a condition precedent to an employee being in § 203(a)(3)(B) service. Allbaugh argues that the DOL's regulations unambiguously provide that it is, and that I committed clear error when I found otherwise and further erred when I based that decision, in part, on language in the preamble to the regulations.²¹ But if there is any ambiguity in the regulation, Allbaugh continues, then deference should be given to an advisory opinion that the DOL issued on March 15, 1984, a provision in the Internal Revenue Manual, and a News Release that the IRS issued on December 3, 1982.²²

The defendants do not address any of these arguments; they instead respond that Allbaugh ignores the caselaw that I relied on in addition to the regulation's preamble in reaching my ruling, and that other courts have since likewise found that damages are not available for a plan's failure to provide a suspension-of-benefits notice.²³ To alter or amend my class certification order for clear error, Allbaugh must leave me with a "definite and firm conviction that a mistake has been committed."²⁴ He has not met this "'very exacting standard.'"²⁵

I disagree with Allbaugh's...