Brug v. Pension Plan of Carpenters Pension Trust Fund for Northern California, 80-4321
| Decision Date | 12 February 1982 |
| Docket Number | No. 80-4321,80-4321 |
| Citation | 669 F.2d 570 |
| Parties | 3 Employee Benefits Ca 1240 Mary BRUG, Plaintiff-Appellant, v. The PENSION PLAN OF the CARPENTERS PENSION TRUST FUND FOR NORTHERN CALIFORNIA, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Nancy L. Ober, Littler, Mendelson, Fastiff & Tichy, San Francisco, Cal., for plaintiff-appellant.
Michael B. Roger, Van Bourg, Allen, Weinberg & Roger, San Francisco, Cal., argued for defendant-appellee; Victor J. Van Bourg, San Francisco, Cal., on brief.
Appeal from the United States District Court for the Northern District of California.
Before CHOY and HUG, Circuit Judges, and GRAY *, District Judge.
This is an action by a clerical employee of a union claiming pension benefits for disability retirement. She became a beneficiary of the Pension Plan under an amendment, adopted by the Trustees of the plan, effective June 1, 1975. The amendment and implementing regulations included certain clerical workers as beneficiaries. In March 1976 the Trustees rescinded the amendment and the regulations. Prior to the rescission of the amendment and regulations she became disabled and made application for disability retirement, for which she was eligible at the time. The Trustees delayed action on her application until after the rescission of the amendment and then denied her benefits on the basis that she was not an employee covered by the plan. The district court upheld the action of the Trustees and entered judgment against the plaintiff. The issue is whether the rescission of the amendment could be applied retroactively so as to exclude the plaintiff as a covered employee. We hold that it could not, and that the action of the Trustees was arbitrary and capricious in not applying the terms of the Pension Plan in effect at the time that she applied for the pension benefits for which she was eligible. We therefore reverse the judgment of the district court.
The Carpenters Pension Trust Fund for Northern California is a jointly administered employee benefit trust created by a Trust Agreement executed in 1957 by various contractors' associations and the district councils and locals of the Carpenters Union. The Trust Agreement initially provided for pension benefits for the employees of the contractors who were required to make contributions pursuant to collective bargaining agreements with the Carpenters Union. Effective in 1965 the local unions, the district councils, and other labor organizations affiliated with the Carpenters Union were also permitted to make contributions to the pension fund for their employees.
The Trust Agreement and the Pension Plan adopted pursuant to the Trust Agreement both contained an identical provision defining an employee covered by the Pension Plan. The provision states:
The term "Employee" means any employee of an Individual Employer who performs one or more hours of work covered by any of the Collective Bargaining Agreements. The term "Employee" shall also include employees of Local Unions and District Councils on whose behalf contributions are made to the Pension Fund pursuant to regulations adopted by the Board of Trustees; provided the inclusion of said employees is not a violation of any existing law or regulation.
Nothing in the Trust Agreement or the Pension Plan limits the categories or classifications of union employees for whom pension contributions may be made.
Article II of the Pension Plan provides All Employees of Local Unions and District Councils on whose behalf contributions are made to the Pension Fund pursuant to regulations adopted by the Board of Trustees are also eligible to participate in the benefits provided under the Pension Plan.
Pursuant to the foregoing provisions of the Trust Agreement and Pension Plan, officers and business agents of the Carpenters Union have had pension contributions made to the Pension Plan on their behalf since 1965. Prior to June 1, 1975, however, local unions and district councils were not required to contribute to the Pension Trust Fund on behalf of their office clerical employees.
In 1974, following an audit, the Internal Revenue Service advised the Trustees that contributions to the Pension Plan by certain local unions and district councils failed to comply with the coverage requirements of the Internal Revenue Code and discriminated in favor of highly compensated officers and business agents and against office clericals employed by the Union.
As a result of this warning from the IRS, the Trustees considered amending the Pension Plan to require the inclusion of clerical employees of any local union or district council that made contributions for its officers and nonclerical employees. The Trustees were advised by their attorneys that clerical employees should be included because the IRS report suggested that the disparity between retirement benefits received by the union clericals and the benefits received by the union officers and business agents could affect the tax-exempt status of the pension fund. The Trustees were informed by their financial consultants and actuaries that the financial impact of including the clerical employees of the unions in the Pension Plan was minimal and that such inclusion would not result in placing a burden on the retirement benefits payable to members of the Carpenters Union. 1
After several months of discussion, the Trustees adopted Amendment 13 and implementing regulations on August 26, 1975, the effect of which was to require the union employers who desired to continue participating in the plan to make contributions for all full-time employees, including the clerical employees as well as the union officials and business agents. The "contribution date" for the clerical employees was established as June 1, 1975. Earlier contribution dates had been previously established for other employees covered by the Pension Plan. The significance of the "contribution date" under the plan is that employers were required to contribute for hours worked by their employees after that date. The covered employee received what was defined as "future service" credit for periods of employment after the contribution date and also received "past service" credit for periods of employment with the participating employers before the contribution date. 2 The clerical workers were thus entitled to "past service" credit for periods of employment with the Union prior to June 1, 1975. 3
A newsletter was sent by the Trustees to all of the local unions, district councils and the State Council of Carpenters, advising Between September 1975 and January 1976, five clerical employees applied for, and were granted, pensions pursuant to Amendment 13. In November, 1975, Brug, a clerical employee of Local No. 22, who was suffering from health problems, contacted the Pension Services Department of the Union and inquired about her eligibility for an early retirement pension. Local No. 22 had made contributions for all its employees, including clerical employees, as required by Amendment 13. Michael Pierce, the Supervisor of the Pension Services Department, informed Brug that at age 63 she was not eligible for normal retirement and that her 12 years and 7 months of past service was not sufficient to establish eligibility for an early retirement pension. However, she was told that because of her health problems she could qualify for a disability retirement pension if she were able to qualify for Social Security disability benefits. 4
them that if they wished to contribute to the Pension Plan for any of their employees, they would be required to contribute for all full-time employees.
Brug made the application with the Social Security Administration and in February, 1975 was informed that she had been awarded the Social Security disability benefits. She then applied for a disability retirement pension. Brug's application was reviewed by the Pension Services Department, which determined that she satisfied all of the eligibility criteria. The Pension Services Department then forwarded Brug's application to the Trustees' Pension Approval Committee (the "Committee") with a recommendation that the application be approved. Ordinarily, the Committee follows the recommendation of the Pension Services Department in voting to approve or reject pension applications. The minutes of the Committee meeting are subsequently presented to the full Board of Trustees for their adoption. Accordingly, Pierce informed Brug that the approval of her application was automatic.
Brug's application came before the Committee on March 16, 1976. Instead of automatically approving the application however, the Committee, aware of some recent complaints from carpenters about the granting of pension benefits to the clerical employees of the unions, deferred consideration of Brug's request until the full Board of Trustees had had a chance to reconsider the propriety of Amendment 13. The Board of Trustees called a special meeting on March 23, 1976 and voted to rescind the amendment, to accept no further contributions to the pension fund on behalf of the unions' clerical employees, and to refund all contributions that had already been made on their behalf. The Committee then reconvened and voted to deny Brug's application.
The Trustees' actions in administering the pension fund are subject to the fiduciary standard set forth in ERISA. Section 404(a)(1) of ERISA provides, in part, that:
a fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and-
(D) in accordance with the documents and instruments governing the plan insofar as such documents and instruments are consistent with the provisions of this subchapter....
29 U.S.C. § 1104(a)(1).
This court has held that under ERISA and under the Labor-Management Relations Act the trustees' decision...
To continue reading
Request your trial
-
Sutton v. Weirton Steel Div. of Nat. Steel Corp.
...forfeited if the terms of sale are approved. Petrella v. NL Industries, supra, 529 F.Supp. at 1366-1367. Cf. Brug v. Pension of Carpenters, etc., 669 F.2d 570, 574-576 (9th Cir.), cert. denied, ___ U.S. ___, 103 S.Ct. 135, 74 L.Ed.2d 116 (1982) (amending pension eligibility retroactively vi......
-
Associates Inv. Co. v. Claeys
...interpretation and subsequent distribution of Jack's money was arbitrary and capricious. Cf. Brug v. Pension Plan of the Carpenters Trust Fund for Northern California (9th Cir.1982), 669 F.2d 570 (retroactive application of an amendment depriving a participant of a vested interest in a fund......
-
Kay v. Thrift and Profit Sharing Plan
...See Pratt v. Petroleum Production Management, Inc. Employee Savings Plan, 920 F.2d 651, 661 (10th Cir.1990); Brug v. Pension Plan, 669 F.2d 570, 575-76 (9th Cir.1982); Danti v. Lewis, 312 F.2d 345, 349 (D.C.Cir.1962); Morales v. Plaxall, Inc., 541 F.Supp. 1387, 1391 (E.D.N.Y.1982); Denzer v......
-
Dhayer v. Weirton Steel Div. of Nat. Steel Corp.
...forfeited if the terms of sale are approved. Petrella v. NL Industries, supra, 529 F.Supp. at 1366-1367. Cf. Brug v. Pension of Carpenters, etc., 669 F.2d 570, 574-576 (9th Cir.), cert. denied, ___ U.S. ___, 103 S.Ct. 135, 74 L.Ed.2d 116 (1982) (amending pension eligibility retroactively vi......