DeVito v. Pension Plan of Local 819 I.B.T.

• Decision Date: 07 January 1997
• Docket Number: No. 90 Civ. 5299(MJL).,90 Civ. 5299(MJL).
• Parties: Accursio DEVITO, as Administrator of the Estate of Jennie DeVito, Plaintiff, v. PENSION PLAN OF LOCAL 819 I.B.T. PENSION FUND and Board of Trustees of the Pension Plan of Local 819 I.B.T. Pension Fund, Defendants/Third Party Plaintiffs, Connecticut General Corporation, Third Party Defendant.
• Court: U.S. District Court — Southern District of New York

975 F.Supp. 258

Accursio DEVITO, as Administrator of the Estate of Jennie DeVito, Plaintiff, v. PENSION PLAN OF LOCAL 819 I.B.T. PENSION FUND and Board of Trustees of the Pension Plan of Local 819 I.B.T. Pension Fund, Defendants/Third Party Plaintiffs Connecticut General Corporation, Third Party Defendant.

No. 90 Civ. 5299(MJL).

United States District Court, S.D. New York.

January 7, 1997.

COPYRIGHT MATERIAL OMITTED

Edgar Pauk, Legal Services for the Elderly, New York City, for Plaintiff.

Davis & Gilbert by Andrew E. Graw, New York City, for Defendants/Third Party Plaintiffs.

Putney, Twombly, Hall & Hirson by Thomas A. Martin, New York City, for Third-Party Defendant Connecticut General Corp.

OPINION AND ORDER

LOWE, District Judge.

Before the Court are the cross-motions for summary judgment of Plaintiff Accursio DeVito and Defendants Pension Plan of Local 819 I.B.T. Pension Fund (the "Plan") and Board of Trustees of the Pension Plan of Local 819 I.B.T. Pension Fund ("Board of Trustees"). For the reasons stated below, the Court grants Plaintiff's motion in part and denies Plaintiff's motion in part, and grants Defendants' motion in part and denies Defendants' motion in part.

BACKGROUND

Plaintiff brings this action under the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq., ("ERISA") and the Labor-Management Relations Act, 29 U.S.C. § 141 et seq. ("Taft-Hartley Act"). Plaintiff seeks declaratory and injunctive relief for Defendants' alleged violations of ERISA and the Taft-Hartley Act (e.g., implementation of a "non-ratable" social security benefit offset formula under the Plan). Plaintiff alleges: (1) Defendants' amendment of the Plan violated ERISA § 204(b)(1)(c), 29 U.S.C. § 1054(b)(1)(c), and 26 C.F.R. 1.411(b)-1(b)(3), by including a "non-ratable" social security offset; (2) Defendants breached their fiduciary duties in violation of ERISA § 404, 29 U.S.C. § 1104, by including the offset provision in the Plan amendment; (3) Defendants violated Section 302(c)(5) of the Taft-Hartley Act, 29 U.S.C. § 186(c)(5), by including a provision in the Plan not for the exclusive benefit of plan participants and beneficiaries; and (4) Defendants violated ERISA § 203(a), 29 U.S.C. § 1053(a), by paying Plaintiff an insufficient rate of interest on retroactive pension payments.

I. Facts

A. Plaintiff's Employment and Pension Benefits

Former Plaintiff Jennie DeVito ("Ms.DeVito")¹ was born on July 30, 1916. Complaint ¶ 9; Amended Answer ¶ 2. From October 7, 1968 to November 6, 1981, over thirteen years, Ms. DeVito worked, without interruption, at Karpel Curtain Corp. in New York City. Complaint ¶ 9; Amended Answer ¶ 2. Throughout Plaintiff's employment at Karpel Curtain Corp., her employer made pension contributions to the Plan on her behalf. Complaint ¶ 9; Amended Answer ¶ 2.

The Board of Trustees is responsible for funding, administering and creating the provisions of the Plan. Complaint ¶ 8; Amended Answer ¶ 2. Although the Board of Trustees administers the Plan, Third-Party Defendant Connecticut General Life Insurance Company ("CIGNA") performs the actual calculation of the pension benefits payable to retirees, including Plaintiff. Complaint ¶ 18; Amended Answer ¶ 8.

On November 13, 1981, Plaintiff applied to receive a pension from the Plan. Complaint ¶ 10; Amended Answer ¶ 2. In late February 1982, Plaintiff received a pension check from the Plan in the amount of $90.66. Complaint ¶ 11; Amended Answer ¶ 2. This check covered the months of December 1981 through February 1982, representing a monthly amount of $30.22. Complaint ¶ 11; Amended Answer ¶ 2. Plaintiff continued to receive monthly pension checks from the Plan in the amount of $30.22 until December 1987. Complaint ¶ 11; Amended Answer ¶ 2.

By letter dated January 5, 1988, Plaintiff's counsel, Edgar Pauk ("Pauk"), requested that the "Plan Administrator" verify the amount of Plaintiff's pension. Complaint ¶ 19; Amended Answer ¶ 8. The Plan Administrator referred Plaintiff's request to CIGNA. Complaint ¶ 19; Amended Answer ¶ 8. Pauk and CIGNA subsequently engaged in a series of correspondence concerning Plaintiff's pension. Complaint ¶ 19; Amended Answer ¶ 8. In a letter dated March 9, 1989, Pauk expressed to CIGNA his belief that the Plan's "social security offset" violated ERISA. Complaint ¶ 19; Amended Answer ¶ 8. By letter dated April 6, 1989, CIGNA, on Defendant's behalf, confirmed its calculation of Plaintiff's pension. Complaint ¶ 21; Amended Answer ¶ 10. By letter dated May 9, 1989, Pauk appealed CIGNA's calculation of Plaintiff's pension to the Board of Trustees. Complaint ¶ 21; Amended Answer ¶ 10. By letter dated May 9, 1989, Perry Scalza ("Scalza"), a Plan Administrator, returned Plaintiff's appeal letter to Pauk without explanation. Complaint ¶ 21; Amended Answer ¶ 10. Scalza also enclosed copies of Plaintiff's pension application and the worksheets CIGNA used to calculate Plaintiff's pension. Complaint ¶ 21; Amended Answer ¶ 10. Pauk reviewed CIGNA's calculation of Plaintiff's pension and, using CIGNA's formula, calculated her pension at $41.30 rather than $30.22 and notified CIGNA of the recalculation. Complaint ¶ 22; Amended Answer ¶ 10.

By letter dated June 20, 1989, Pauk requested that Scalza inform him of the status of Plaintiff's appeal and explain why her appeal letter was returned. Complaint ¶ 23; Amended Answer ¶ 10. By letter dated June 21, 1989, Scalza informed Pauk that Plaintiff's appeal was being reviewed by CIGNA. Complaint ¶ 23; Amended Answer ¶ 10. In July 1989, CIGNA sent Plaintiff an "adjustment check" in the amount of $1,019.36, which represented the amount of purported "underpayment" of her pension since 1981 as per Pauk's recalculation. Complaint ¶ 24; Amended Answer ¶ 10. This amount did not include interest. Complaint ¶ 24; Amended Answer ¶ 10.

By letter dated July 26, 1989, Pauk requested that the Plan pay interest on the higher of the "legal rate" or the "rate earned by the Plan" to Plaintiff. Complaint ¶ 25; Amended Answer ¶ 10. In September 1989, Plaintiff received a check for $462.79 from CIGNA which represented five percent interest on the amount of underpayment. Complaint ¶ 26; Amended Answer ¶ 10. Pauk subsequently complained to the Board of Trustees that the interest rate applied to the underpayment was insufficient. Complaint ¶ 27; Amended Answer ¶ 10. Pauk also requested that the Board of Trustees decide Plaintiff's pending appeal regarding the social security benefit offset. Complaint 1 27; Amended Answer ¶ 10. By letter dated September 28, 1989, Scalza responded that Plaintiff's claims were being decided by CIGNA. Complaint ¶ 28; Amended Answer ¶ 10. Plaintiff contends, and Defendants fail to dispute, that the Board of Trustees has not decided Plaintiff's appeal. Complaint ¶ 29.²

B. The Plan

The Board of Trustees established the Plan on January 14, 1966. Complaint ¶ 7; Amended Answer ¶ 2. ERISA first applied to the Plan on October 1, 1976, when the Plan was amended in an effort to bring it into compliance with the statute. Complaint ¶ 7; Pl.'s 3(g) Statement ¶ 15; Defs.' 3(g) Statement, Part II ¶ 1. The Plan is funded with contributions from employers who have collective bargaining agreements with Local 819 of the International Brotherhood of Teamsters. Complaint ¶ 7; Amended Answer ¶ 2. Section 4.2 of the Plan provides a "Basic Formula" for calculating the monthly amount of an employee's pension. Complaint ¶ 13; Amended Answer ¶ 4. Under the Basic Formula, a pensioner's monthly pension equals the greater of: (1) [(1/12) × (.45 × (Final Earnings)) × (years of participation / 20)]-[Pensioner's Social Security Benefit]; or (2) $2.00 × (the Participant's full years of Credited Service up to a maximum of 20 years). Complaint ¶ 13; Seide Aff. Ex. F at 21-22 (copy of the Plan). The Plan defines "Final Earnings" as "the average of the Participant's annual earnings received from his Employer during the latest five year period immediately preceding the Participant's Retirement Date or date of Termination of Employment, whichever first occurs." Complaint ¶ 14; Seide Aff. Ex. F at 5-6. The Plan defines. "social Security Benefit" as "the monthly Primary Insurance Amount which a Participant is eligible to receive under the provisions of the federal Social Security Act ..." Id. at 6-7. The Plan defines "Credited Service" as the "period of employment used in calculating the Participant's pension ..." Id. at 8. Plaintiff's Final Earnings are $8,574.50, Pl.'s Rule 3(g) Statement ¶ 5, and her Social Security Benefit is $135.68, id. ¶ 8.³

DISCUSSION

I. Summary Judgment

A. Standards

A party is entitled to summary judgment when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). Furthermore, the Federal Rules of Civil Procedure "mandat[e] the entry of summary judgment, after adequate discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). To defeat a motion for summary judgment, the non-moving party "must do more than simply show that there is some metaphysical doubt as to the material facts...." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986) (citation omitted). Rather, the opposing party must produce "concrete evidence from which a reasonable juror could return a verdict in [its] favor...." Dister v. Continental Group, Inc., 859 F.2d 1108, 1114 (2d Cir.1988) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d...