Carr v. Trustees of Hotel & Restaurant Emp.

• Decision Date: 06 April 1984
• Docket Number: Civ. A. No. 81-3944.
• Parties: Lonzie CARR v. TRUSTEES OF the HOTEL & RESTAURANT EMPLOYEES AND BARTENDERS INTERNATIONAL UNION PENSION FUND.
• Court: U.S. District Court — Eastern District of Pennsylvania

585 F. Supp. 949

Lonzie CARR v. TRUSTEES OF the HOTEL & RESTAURANT EMPLOYEES AND BARTENDERS INTERNATIONAL UNION PENSION FUND.

Civ. A. No. 81-3944.

United States District Court, E.D. Pennsylvania.

April 6, 1984.

Alan F. Markovitz, Trevose, Pa., for plaintiff.

Bruce E. Endy, Meranze, Katz, Spear & Wilderman, Philadelphia, Pa., for defendants.

MEMORANDUM OF DECISION

SHAPIRO, District Judge.

I. INTRODUCTION

This action was brought under Section 502(a)(1)(B) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132(a)(1)(B), to recover benefits due plaintiff from the Hotel & Restaurant Employees and Bartenders International Union Pension Fund ("Fund"). Jurisdiction was based on 28 U.S.C. § 1331. Upon the death of the plaintiff in 1982, the parties stipulated to substitution of Caroline Carr as a plaintiff both in a representative capacity on behalf of her late husband and in her own right. The issue is whether plaintiff is entitled to credit for service prior to employer contributions to the Fund on his behalf. By stipulation the evidentiary record in this case consists of stipulated facts and the deposition of plaintiff Lonzie Carr. Following a non-jury trial on that record, the court finds in favor of plaintiff.

II. FACTS

Local 111, Chefs, Cooks, Pastry Cooks and Assistants Union (Local 111), affiliated with the Hotel & Restaurant Employees and Bartenders International Union AFL-CIO, is a labor organization within the meaning of Section 2(3) of the National Labor Relations Act (Stipulation Nos. 1, 3 and 4). Mr. Carr was a union member and an employee of the Ambassador Restaurant from at least January 1, 1954 until the restaurant closed on September 30, 1975. Mr. Carr was later employed at Pop Edwards Restaurant until some time in 1977.¹ (Carr Deposition at 9-10).

On or about October 1, 1967, the Local 111 Pension Trust Fund was established with an employer association to provide pension benefits for participants in the Fund. (Stipulation No. 6). The Local 111 Pension Fund was merged on July 9, 1975 with the Hotel & Restaurant Employees and Bartenders International Union Pension Plan (Stipulation No. 7). The pension fund is financed by contributions from employers according to the terms of collective bargaining agreements. Employees of contributing employers become eligible for benefits according to the terms of the Plan.

Local 111 had a collective bargaining agreement with the Ambassador Restaurant since at least 1964. (Stipulation No. 5). The Union and the Restaurant entered into an agreement dated September 28, 1970 that required, inter alia, the Restaurant to pay contributions to the pension fund for an employee (William Thompson) from October 1, 1970 and for all other employees from July, 1971 (Exhibit D to Stipulation).

Mr. Carr applied for a disability pension on March 26, 1978 (Stipulation No. 14). The application was denied for lack of adequate years of credited service necessary to qualify for benefits under the pension plan (Exhibit XX to Stipulation). The Fund records show no employer contributions for Mr. Carr for the period from the inception of the Fund on October 1, 1967 until September 1, 1971. (Stipulation No. 13). In denying Mr. Carr's claim, the administrator determined that because no contributions were made for Mr. Carr for two years subsequent to 1967, he incurred a break in service in 1969 that lost him credit for all service accrued through September, 1967, so that he had less than the required number of years for eligibility. The Appeals Committee affirmed this determination and also found insufficient evidence that the Ambassador Restaurant, Mr. Carr's employer for the disputed period, had a contractual obligation to make pension contributions prior to 1971. Defendants admit that Mr. Carr complied with all procedural steps, including exhaustion of internal administrative remedies, and that he would have been entitled to benefits but for the lack of employer contributions from 1967-71 and the consequent alleged break in service (Stipulation Nos. 13, 15).

III. DISCUSSION

Plaintiff brought this suit pursuant to 29 U.S.C. § 1132(a)(1)(B) which provides:

(a) A civil action may be brought—

(1) by a participant or beneficiary—

(A) ...

(B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan ....

The issue is whether plaintiff's decedent was eligible for benefits when he applied for a disability pension in 1978.

The plaintiff has the burden of showing that the challenged action or decision was arbitrary and capricious. Music v. Western Teamsters Pension Fund, 712 F.2d 413, 419 (9th Cir.1983). As stated in Rosen v. Hotel and Restaurant Employees & Bartenders Union, Etc., 637 F.2d 592, 596 (3d Cir.), cert. denied, 454 U.S. 898, 102 S.Ct. 398, 70 L.Ed.2d 213 (1981):

Although this is a limited standard of review it `leads neither to abdication of traditional judicial control of fiduciaries nor to excessive judicial intervention in trust operations, in harmony with federal labor policy.' Rehmar v. Smith, 555 F.2d 1362, 1371 (9th Cir.1976).

Two statements of the Plan are relevant to the determination of eligibility: the "1974 Plan," effective October 1, 1967 with amendments to January 1, 1974 (Exhibit B to Stipulation); and the "1976 Plan," effective October 1, 1976 (Exhibit C to Stipulation), which was in force when Mr. Carr applied for benefits. Defendants assert, and the plaintiff does not dispute, that the 1976 Plan determines Mr. Carr's eligibility; it provides that a participant is eligible for a disability pension, "if his employment is terminated by reason of Disability after age 50, but before age 62, and after he has completed 15 or more years of Credited Service." Id. at § 5.3. Section 4.3 of the 1976 Plan states in part:

Credited Service prior to January 1, 1976, for a Participant included under the prior provisions of the Plan, shall be determined under the prior provisions of the Plan.

(Exhibit C to Stipulation). Mr. Carr was a participant under the 1974 Plan so credited service prior to January 1, 1970 is determined for him by that plan which states:

Section 9. ... For periods on and after the effective date of this Pension Plan an employee will be credited with one (1) year of credited service for each 1,600 hours of work for which contributions are submitted on his behalf.... For periods of time prior to the effective date of this Pension Plan an employee will be credited with one (1) year of credited service for each uninterrupted year in which he has been a member of the Union in good standing from his most recent initiation date or readmission date.

(Exhibit B to Stipulation). Under Section 7, the effective date means October 1, 1967.

Defendants contend Mr. Carr incurred a break in service which negated any past service credit under the 1974 Plan. Under Section 10 a break in continuous service means:

(a) An employee who fails to earn at least one-half (½) year of credited service in any two consecutive plan years ... shall lose his accumulated credited service.

Mr. Carr's employer failed to contribute to the Fund prior to 1971; defendants claim this lack of contribution from the effective date in 1967 resulted in a break of service as of 1969. (Letter of March 22, 1979 from H. Leavitt, Chairman of the Fund Legal Committee, to Carr). As a result, defendants claim Mr. Carr had earned only 4.25 years of credited service when he applied for a pension. (Defendants' Proposed Findings of Fact and Conclusions of Law, No. 38).

Defendants' reading of Section 10 is not consistent with the other provisions of the Plan.² The operative phrases of this section are "employee" and "any two consecutive plan years." The second phrase is clear in meaning—any two years; it does not state "since the effective date of the Plan." Further, this phrase is inextricably tied with the first phrase, "employee." Section 6 of the Plan defines "Employee" as:

Any person in the employ of an Employer and who is included in the collective bargaining unit represented by the Local Union and for whom contributions to the Fund are made.

Section 5 of the Plan defines "Employer" as:

Any person, firm, association, partnership, or corporation contributing to the Local 111 Pension Trust Fund as required by a collective bargaining agreement between such Employer and the Local Union, including the Local Union as an Employer.

Therefore, under Section 10 Mr. Carr became an "Employee" when his employer contributed to the Fund on his behalf; this occurred no earlier than 1971 when defendants concede the Ambassador Restaurant first became obligated to make contributions on his behalf under the terms of the collective bargaining agreement. To determine whether there was a break in service, one must look to the period of time commencing in 1971 that Mr. Carr was an "Employee" under the Plan. No break in service occurred for Mr. Carr from 1971 to the date of application in 1978. Under the terms of the Plan itself, Mr. Carr incurred no break in service. He is entitled to all accumulated past service earned prior to 1971.

Under Section 9 of the 1974 Plan, a participant receives one year of credited service for each uninterrupted year of membership in the Union prior to the effective date of the Plan. Mr. Carr was a member of Local 111 continuously from January 1, 1954. Under the terms of the Plan itself, Mr. Carr should have received past service credit for the period from January 1, 1954 to October 1, 1967 (the effective date of the 1974 Plan) or 13.75 years. This past service credit of 13.75 years plus Mr. Carr's credited years of 4.25 for which contributions were made beginning in 1971 total 18 credited years of service; that is more than the minimum 15 years required for pension benefit eligibility.

The 1974 and 1976 plans manifest an intention to...