Edwards v. Wilkes-Barre Pub. Co. Pension Trust

• Decision Date: 09 April 1985
• Docket Number: WILKES-BARRE,No. 84-5107,84-5107
• Citation: 757 F.2d 52
• Parties: 6 Employee Benefits Ca 1395 Merle R. EDWARDS, James Bridgland, William Fisher, Edward J. Schrode, John T. Tredinnick, and Richard L. Zath, Appellants, v.PUBLISHING CO. PENSION TRUST and Wilkes-Barre Publishing Co., Appellees.
• Court: U.S. Court of Appeals — Third Circuit

Page 52

757 F.2d 52

6 Employee Benefits Ca 1395

Merle R. EDWARDS, James Bridgland, William Fisher, Edward J Schrode, John T. Tredinnick, and Richard L. Zath, Appellants, v. WILKES-BARRE PUBLISHING CO. PENSION TRUST and Wilkes-Barre Publishing Co., Appellees.

No. 84-5107.

United States Court of Appeals Third Circuit.

Argued Oct. 25, 1984.

Decided March 7, 1985.

Rehearing and Rehearing In Banc Denied April 9, 1985.

Warren J. Borish (argued), Meranze, Katz, Spear & Wilderman, Philadelphia, Pa., for appellants.

R. Eddie Wayland (argued), King, Ballow & Little, Nashville, Tenn., Richard M. Goldberg, Hourigan, Kluger, Spohrer & Quinn, Wilkes-Barre, Pa., for appellees.

Before GIBBONS and BECKER, Circuit Judges, and KATZ, District Judge ^*.

OPINION OF THE COURT

BECKER, Circuit Judge.

This appeal presents the question whether the trustees of a pension plan governed by the Employee Retirement Income Security Act, 29 U.S.C. Sec. 1001 et seq. (ERISA), acted arbitrarily and capriciously or in violation of the vesting, accrual, and funding provisions of ERISA by including in the calculation of plaintiffs/appellants' pension benefits a period during which appellants were on strike and therefore were not compensated. The district court held that the trustees did not act in such a manner, and entered judgment for the defendants/appellees. We affirm.

I. FACTUAL AND PROCEDURAL HISTORY

This suit arises out of an impasse in collective bargaining between the Wilkes-Barre Publishing Company (the "Company"), publisher of the Times Leader, and the four separate labor organizations representing various groups of company employees. On October 6, 1978, appellants, all of whom were long-term employees of the Company and fully vested under its pension plan, ceased active employment with the Company when they began participation in a strike against it. ¹ Appellants never returned to their jobs, retiring while still out on strike. Shortly thereafter, each appellant applied for benefits under the Wilkes-Barre Publishing Company Pension Trust (the "Plan").

The Plan provides that a participant shall have a fully vested right to pension benefits after he or she has completed ten years of credited service with the Company (see Appellees' Brief, Exhibit I, Art. 5, Sec. 5.01 (hereinafter "Ex. 1")). Participants who retire on the normal retirement date, which is defined as the participant's sixty-fifth birthday (see Ex. 1, Art. 3, Sec. 3.1; Art. 1, Sec. 1.4(n)), are entitled to a normal retirement pension. The Plan also provides for the receipt of early retirement and disability retirement benefits (see Ex. 1, Art. 3, Sec. 3.1 and 3.4).

The formula for computing the amount of pension benefits available to participants who elect any of the types of retirements mentioned above is based, inter alia, upon an average compensation component. This compensation component is derived by calculating twenty-two percent of the retiree's average annual compensation. Average annual compensation is defined as the average yearly compensation received by a Plan participant during the five-consecutive-year-period immediately prior to the earlier of (1) the participant's sixty-fifth birthday, or (2) the date of the participant's termination of employment (see Ex. 1, Art. 1, Sec. 1.4(d)). The Plan, however, does not define termination of employment. Notwithstanding the foregoing, the Plan provides for a minimum monthly pension benefit of not less than one hundred dollars. This minimum may be reduced pro rata for credited service less than fifteen years (see Ex. 1, Art. 4, Sec. 4.1(c)).

In calculating appellants' benefits, the trustees interpreted the Plan to include in the computation of average annual compensation the period during which appellants were on strike and, therefore, received no compensation from the Company. Under this interpretation, the monthly pension that each appellant was entitled to receive was significantly less than it would have been had appellants continued to work (rather than strike) until retirement. Similarly, the pension benefits were less than they would have been had appellants chosen to terminate their employment and take immediate retirement rather than to go out on strike.

In the three strikes that preceded the 1978 strike, strikers did not experience a reduction in their pension benefits due to the inclusion of strike time in the calculation of average annual compensation. According to the district court, "it is uncontroverted that in each prior strike, the result [appellants] now seek ... was obtained as part of the negotiated settlement of each strike." App. at 1059. For example, as part of the collectively-bargained settlement of the 1954 strike, the Company paid retirees whose benefit calculation included the time period covered by the strike an additional amount equal to the reduction of benefits due to lost wages. And, pursuant to agreements arising out of the 1973 and 1974-75 strikes, a period of time equal to the length of the strike was added to the five-year period in the calculation of average annual compensation.

Dissatisfied with the trustees' interpretation of the Plan in the midst of this latest strike, appellants filed this suit on October 21, 1981, to compel a recalculation of their pension benefits. Named as defendants were the Wilkes-Barre Publishing Company Pension Trust and the Wilkes-Barre Publishing Company. On cross motions for summary judgment, the district court held that defendants acted reasonably in their calculation of plaintiffs' pension benefits and that no violation of ERISA occurred. The district court granted summary judgment in favor of the Pension Trust and the Company, and this appeal followed. ²

II. DISCUSSION

A. Statute of Limitations

As an initial matter, we must address appellees' contention that appellants' claim is barred by the applicable statute of limitations. ³ In appellees' submission since no statute of limitations is directly applicable to cases of this type, the appropriate statute of limitations is Pennsylvania's thirty-day period for vacating arbitration awards under 42 Pa.Cons.Stat.Ann. Sec. 7314 (Purdon 1982). In support of this contention, appellees rely on United Parcel Service, Inc. v. Mitchell, 451 U.S. 56, 101 S.Ct. 1559, 67 L.Ed.2d 732 (1982), where the Supreme Court held that an employee's wrongful discharge claim against his employer was governed by the state statute of limitations for vacatur of arbitration awards. In the alternative, appellees argue that the six-month limitations period embodied in Sec. 10(b) of the National Labor Relations Act, 29 U.S.C. Sec. 160(b), should apply. The appellees rely in this respect on Del Costello v. International Brotherhood of Teamsters, 462 U.S. 151, 103 S.Ct. 2281, 76 L.Ed.2d 476 (1983), where the Court supplanted the Mitchell rule and applied the six-month statute of limitations in Sec. 10(b) to duty of fair representation cases.

Appellants counter that this action is not barred by a statute of limitation defense in light of this court's decision in Adams v. Gould, 739 F.2d 858 (3d Cir.1984), cert. denied, --- U.S. ----, 105 S.Ct. 806, 83 L.Ed.2d 799 (1985). In Adams, employees brought an action against the pension plan trustee for breach of fiduciary duty in refusing to pay pension benefits. The defendants claimed that the suit was barred by the six month statute of limitations in Sec. 10(b) of the NLRA. This court, however, refused to apply the statutory period of Sec. 10(b), reasoning that where a dispute involves collectively bargained pension rights, the policies underlying the adoption of a six-month statute of limitations, primarily the need to resolve disputes quickly to preserve labor peace, are inapplicable. Instead, noting that the Supreme Court in Del Costello emphasized the desirability of uniform national limitations periods to govern actions arising under federal statutes, id. at 866, we held that the three-year ERISA statute of limitations, 29 U.S.C. Sec. 1113, should be applied, and that the employees' suit was not time barred.

Appellees argue that Adams is inapposite to the case at bar because the present lawsuit is intimately related to a strike that has not yet settled. We disagree. Although the dispute between the parties has its foundation in a long-running labor dispute, appellants have retired from the Company and there is no indication that resolution of their disagreement with the pension trustees will have even the remotest bearing on the marathon labor dispute between the Company and the unions. See supra note 1. Rather, this case, like Adams, involves the long term interests of present beneficiaries to a pension plan, not the disputed terms of a collective bargaining agreement that affects the day-to-day operation of a business. Accordingly, we hold that Adams is controlling, and that appellants thus had three years to file their complaint. The earliest time that appellants' claim accrued was February, 1979, when the first of the appellants retired. Since the complaint was filed in October, 1981, appellants fall well within the statutory period.

Appellees' proffered procedural grounds having failed, we now turn to the substantive issues arising out of this dispute.

B. Was the Trustees' Calculation of Benefits Arbitrary and Capricious?

Section 1104(a)(1) of ERISA, which sets out the fiduciary duty of pension plan trustees, provides, in pertinent part a fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and--

(A) for the exclusive purpose of:

(i) providing benefits to participants and their beneficiaries; and

(ii) defraying reasonable expenses of administering the plan ...

29 U.S.C. Sec. 1104(a)(1). When the amount of benefits to which a distinct group of beneficiaries is entitled turns upon an interpretation of an undefined term in the plan, pension trustees must necessarily strike a balance between...