Dean v. Nat'l Prod. Workers Union Severance Trust Plan

• Citation: 46 F.4th 535
• Decision Date: 15 August 2022
• Docket Number: 21-1872
• Parties: Walter DEAN and Dean Wollenzien, individually and on behalf of those similarly situated, Plaintiffs-Appellants, v. NATIONAL PRODUCTION WORKERS UNION SEVERANCE TRUST PLAN, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

46 F.4th 535

Walter DEAN and Dean Wollenzien, individually and on behalf of those similarly situated, Plaintiffs-Appellants,
v.
NATIONAL PRODUCTION WORKERS UNION SEVERANCE TRUST PLAN, et al., Defendants-Appellees.

No. 21-1872

United States Court of Appeals, Seventh Circuit.

Argued February 10, 2022
Decided August 15, 2022

George A. Luscombe, III, Elizabeth L. Rowe, John Peter Dowd, Attorneys, Dowd, Bloch, Bennett, Cervone, Auerbach & Yokich, Chicago, IL, for Plaintiffs-Appellants.

Jed Wolf Glickstein, Nancy G. Ross, Samantha A. Machock, Attorneys, Mayer Brown LLP, Chicago, IL, for Defendants-Appellees National Production Workers Union Severance Trust Plan, National Production Workers Union 401(k) Retirement Plan, Jose Diaz.

Nancy G. Ross, Attorney, Mayer Brown LLP, Chicago, IL, for Defendants-Appellees Joseph V. Senese, Rosie Gibson.

Before Manion and Jackson-Akiwumi, Circuit Judges.^*

Jackson-Akiwumi, Circuit Judge.

Walter Dean and Dean Wollenzien sued their former pension plans, the plans' trustees, and the plans' administrator for various claims under the Employee Retirement Income Security Act of 1974—more commonly known as ERISA. The district court dismissed the suit, and plaintiffs now appeal. We affirm in part, vacate in part, and remand for further proceedings.

I

A. Factual Background

Plaintiffs are employees of Parsec, Inc. Until 2017, the National Production Workers Union, Local 707, represented them. As members of the NPWU, plaintiffs participated in the NPWU's Severance Trust Plan (the "Severance Plan") and its 401(k) Retirement Plan (the "401(k) Plan," together "the Plans"). These plans are multiemployer defined-contribution plans, where each participant has their own account and is entitled solely to the contributions to that account and any investment gains minus expenses. Parsec contributed to the Severance Plan until 2012 and then to the 401(k) Plan from 2012 until 2017.

In 2016, the Severance Plan settled a lawsuit with the Department of Labor related to mismanagement of its assets and certain loans. The settlement agreement required the Severance Plan to pay back the loans and approved the current administrators of the Severance Plan. The agreement

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also approved the Severance Plan's use of its third-party accounting firm, Jeffrey W. Krol & Associates.

In 2017, Parsec employees voted to decertify the NPWU and elect Teamsters Local 179 as their new bargaining representative. Before the election, the Teamsters told Parsec employees that their retirement accounts would roll over to the Teamsters' plan. But NPWU trustees and fiduciaries told them otherwise: If employees switched to the Teamsters, their retirement accounts would become inactive but remain under NPWU control. After the election, Parsec—which was the only employer currently contributing to the NPWU's 401(k) Plan—stopped contributing to it and began contributing to the Teamsters' plan. And as the plan's trustees had warned, the Parsec employees' accounts became inactive but remained under the plan's control.

Plaintiffs, meanwhile, reviewed the Plans' annual disclosures and discovered what they believed to be excessive expenses, including accounting fees paid to Krol & Associates, undisclosed payments to NPWU officers and their relatives, and high salaries for at least one trustee, Vincent Senese, and the plan administrator, James Meltreger.

Plaintiffs requested copies of various documents from the Plans, which they were entitled to under §§ 102, 104, and 105 of ERISA. The Plans responded two months later but did not provide some of the requested documents, including a "summary plan description" for the 401(k) Plan, which simply did not exist.

In June 2018, plaintiffs sent a letter requesting that the Plans roll over their accounts to the Teamsters' plan. The Plans refused and directed plaintiffs to file a claim for distribution of benefits. Two months later, plaintiffs sent a second letter asking for a rollover, which the Plans answered the same way. Finally, in October 2018, plaintiffs submitted a third letter, which they cast as a "formal" rollover claim, where they requested a rollover or, in the alternative, plan documents like the settlement agreement with the Department of Labor. Plaintiffs supplemented that letter in February 2019. Defendants never responded.

Plaintiffs then filed a putative class action against the Plans, the Board of Trustees and the five individuals on it, including Senese, and the plan administrator, Meltreger. Plaintiffs sought the rollover of their accounts to the Teamsters' plan under § 502(a)(1)(B) and § 502(a)(3) of ERISA. They further alleged that defendants had breached their fiduciary duties or otherwise violated ERISA by not amending the Plans to allow rollover, by failing to disclose conflicts of interests with NPWU employees on their payroll, and by paying excessive expenses and salaries. Finally, plaintiffs alleged that Meltreger had failed to timely provide information to which they were entitled.

The district court dismissed the suit for failure to state a claim because the Plans terms did not require rollover and the allegations failed to show that the trustees breached their fiduciary duties. Originally, the district court dismissed the breach of fiduciary duties claims for excessive administrative fees and the claims for the untimely provision of information without prejudice and gave plaintiffs leave to amend. Plaintiffs chose to stand on their allegations and did not file an amended complaint, so the district court converted its dismissal of all counts to dismissal with prejudice. This appeal followed.

B. The Relevant Provisions of the Plans

Before we go any further, we briefly highlight the core provisions of the Plans

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at issue. The Plans operate according to two core documents: the trust instrument, which establishes the trust where the Plans hold their assets, and the plan instrument, which provides the terms of the particular plan. See 29 U.S.C. §§ 1102 – 03. Under these instruments, the Plans allowed for distribution of benefits in three scenarios: severance, death, or when the participant reaches the retirement age of 65. "Severance" occurred when the participant had been laid off or was transferred to non-covered employment for more than a year, but not if the participant entered non-covered employment as a result of the employer no longer being obligated to contribute to the Plans under a collective bargaining agreement.

A qualifying participant needed to file a signed application, in the proper format, to receive benefits. The Plans did not explain what a proper application should include, only that "[t]he Trustees [were] the sole judges of the adequacy of an application and of any applicant's entitlement to benefits." The Plans also allowed direct rollovers of a participant's distributions to other retirement plans, if the participant qualified for their benefits.

When an employer stopped contributing, the instruments required the trustees "to maintain the Accounts of each Participant employed by such former Employer, and to credit or charge each such Account for net investment income, gains, or losses." In this event, employees were not entitled to distributions until their severance or death. If every employer stopped contributing to a given plan, that plan would automatically terminate, and the trustees would hold and maintain the employees' accounts "until the [Trust] Fund is fully distributed or the Trust is terminated as provided in the Trust Agreement," which in turn the trustees could terminate "at any time." Finally, the trustees were permitted to amend the Plans.

II

We review a district court's dismissal for failure to state a claim de novo, presuming the truth of the facts alleged in the complaint and drawing all reasonable inferences in the plaintiffs' favor. Taha v. Int'l Bhd. of Teamsters, Local 781 , 947 F.3d 464, 469 (7th Cir. 2020) (citations omitted). A district court may consider documents attached to a motion to dismiss if the documents are referenced in the plaintiffs' complaint and are central to the claim. 188 LLC v. Trinity Indus., Inc. , 300 F.3d 730, 735 (7th Cir. 2002) (citation omitted).

A. Demand for Rollover of Assets

Plaintiffs first claim that both plans should have rolled over the assets in their accounts under ERISA's enforcement of rights provisions (§ 502(a)(1)(B)) or as claim of equitable relief (§ 502(a)(3)). A participant or beneficiary may sue a plan "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." ERISA, § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B). This provision "is designed to protect contractually defined benefits" and follows traditional forms of contract relief, "including recovery of benefits accrued." Larson v. United Healthcare Ins. Co. , 723 F.3d 905, 911 (7th Cir. 2013). Like with any contract, we interpret a plan's terms "in an ordinary and popular sense as would a person of average intelligence and experience" and resolve ambiguities "by referring to the federal common law rules of contract interpretation." Hammond v. Fid. & Guar. Life Ins. Co. , 965 F.2d 428, 430 (7th Cir. 1992).

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Participants, beneficiaries, or fiduciaries may also "enjoin any act or practice which violates any provision of [ERISA] or the terms of the plan" or "obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of [ERISA] or the terms of the plan." ERISA, § 502(a)(3), codified at 29 U.S.C. § 1132(a)...