Eisenrich v. Mpls. Retail Meat and Food Pens. Fund

• Decision Date: 15 September 2003
• Docket Number: No. CIV.02-984 (DSD/SRN).,CIV.02-984 (DSD/SRN).
• Citation: 282 F.Supp.2d 1077
• Parties: Tom EISENRICH, Plaintiff, v. MINNEAPOLIS RETAIL MEAT CUTTERS AND FOOD HANDLERS PENSION FUND, sued as Minneapolis Retail Meat Cutters and Food Handlers Pension Plan, Defendant.
• Court: U.S. District Court — District of Minnesota

282 F.Supp.2d 1077

Tom EISENRICH, Plaintiff, v. MINNEAPOLIS RETAIL MEAT CUTTERS AND FOOD HANDLERS PENSION FUND, sued as Minneapolis Retail Meat Cutters and Food Handlers Pension Plan, Defendant.

No. CIV.02-984 (DSD/SRN).

United States District Court, D. Minnesota.

September 15, 2003.

COPYRIGHT MATERIAL OMITTED

Robert J. Hajek, Warchol, Berndt & Hajek, Minneapolis, MN, counsel for plaintiff.

Corey J. Ayling, Kathleen M. Brennan, McGrann, Shea, Anderson, Carnival, Straughn & Lamb, Minneapolis, MN, counsel for defendant.

ORDER

DOTY, District Judge.

This matter is before the court upon the cross-motions of the parties for summary judgment. For the following reasons, plaintiff's motion is granted and defendant's motion is denied.

BACKGROUND¹

Defendant is an employee benefit plan covered by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq. The terms of the plan and requirements for participation are set forth in the Restated Agreement and Declaration of Trust ("Declaration"), the Pension Plan Plan Document ("PPPD") and the Summary Plan Description ("Plan Summary").² Plaintiff is a plan participant who received retirement benefits under the plan. Plaintiff later became reemployed, but did not inform defendant. When defendant learned that plaintiff had resumed working, it sent him a letter stating that his pension benefits were suspended because he was involved in disqualifying employment. A copy of the rules covering suspension of benefits was enclosed with the notice of suspension. Intending to appeal the suspension, plaintiff timely requested a hearing before the plan fiduciary, as required by the plan documents. The designated fiduciary of the pension plan is the Board of Trustees (the "Trustees"). A hearing was scheduled before the Trustees. In accordance with the procedures set forth in the plan documents, plaintiff was allowed to have an attorney or other representative present at the hearing, to bring witnesses and present evidence on his behalf.

Plaintiff retained a stenographer for the hearing at his own cost. The Trustees refused to proceed with the hearing in the presence of plaintiff's stenographer. Plaintiff, on the other hand, refused to proceed with the hearing without the stenographer. The Trustees told plaintiff that a transcript was not provided for in the plan documents and was not part of the Trustees' past hearing practices. They also informed plaintiff that by refusing to proceed with the hearing without the stenographer, he would fail to exhaust his administrative remedies and be deemed to have waived his right to appeal the denial of benefits. Plaintiff refused to proceed without the stenographer and subsequently filed suit in Hennepin County District Court in the State of Minnesota.

Plaintiff's complaint alleged breach of contract, waiver of contract rights, defamation and intrusion upon seclusion, and also demanded attorney's fees, costs and disbursements. Defendant removed the action to this court pursuant to 28 U.S.C. §§ 1441(a) and 1446(a).³ By stipulation, the parties have since dismissed all but the breach of contract claim and agreed that the remaining questions of law would be resolved on cross-motions for summary judgment. (See Stip. of Facts at 6.)

DISCUSSION

I. Summary Judgment Standard

Rule 56 provides that summary judgment is appropriate "if 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). In order for the moving party to prevail, it must demonstrate to the court that "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)(quoting Fed.R.Civ.P. 56(c)). A fact is material only when its resolution affects the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute is genuine if the evidence is such that it could cause a reasonable jury to return a verdict for either party. See id. at 252, 106 S.Ct. 2505. On a motion for summary judgment, all evidence and inferences are to be viewed in a light most favorable to the nonmoving party. See id. at 255, 106 S.Ct. 2505. The nonmoving party, however, may not rest upon mere denials or allegations in the pleadings, but must set forth specific facts sufficient to raise a genuine issue for trial. See Celotex, 477 U.S. at 324, 106 S.Ct. 2548. Moreover, if a plaintiff cannot support each essential element of its claim, summary judgment must be granted because a complete failure of proof regarding an essential element necessarily renders all other facts immaterial. See id. at 322-23, 106 S.Ct. 2548.

Summary judgment is appropriate where, as here, the parties stipulate to the facts in question and the court need only apply the law to the facts in the record. See Oldham v. West, 47 F.3d 985, 988 (8th Cir.1995) (summary judgment is appropriate when facts are not in dispute).

II. Preemption of State Law Claims

Plaintiff's sole claim is styled as a common law breach of contract claim. (See Compl. at 5.) However, when a claim arising under state common law is directly related to an employee pension and benefit plan, it is preempted by ERISA. See 29 U.S.C. § 1144(a); Howard v. Coventry Health Care of Iowa, Inc., 293 F.3d 442, 445-46 (8th Cir.2002); Molasky v. Principal Mut. Life Ins. Co., 149 F.3d 881, 884 (8th Cir.1998). When state law claims are preempted by the Act, the court is required to determine whether the complaint states a cause of action under ERISA or federal common law. See Slice v. Norway, 978 F.2d 1045, 1046 (8th Cir.1992).

Plaintiff's contract claim could be read to allege a breach of fiduciary duty claim arising under 29 U.S.C. § 1104. However, breach of fiduciary duty claims generally arise when a trustee's failure to act with reasonable care, prudence or diligence results in a denial of benefits or a loss to the trust. See 29 U.S.C. § 1104. Because the Trustees' refusal to allow plaintiff to transcribe the hearing did not lead to a loss to the trust or to the denial of plaintiff's benefits, plaintiff's cause of action is better characterized a declaratory judgment action seeking a clarification of rights and duties under the plan and the Act. Pursuant to the Act, a plan beneficiary may bring a civil action to "obtain ... appropriate equitable relief." 29 U.S.C. § 1132(a)(3); see also 28 U.S.C. § 2201 (Declaratory Judgment Act permits court to declare legal rights and relations of parties); Prudential Ins. Co. of America v. Doe, 76 F.3d 206, 210 (8th Cir. 1996) (allowing declaratory judgment of rights and obligations under ERISA).

III. Standard of Review of Trustees' Actions

Defendants assert that the Declaration and other plan documents do not permit claimants to transcribe benefits denial hearings. When, as here, a trust instrument gives a trustee the discretion to interpret its terms, the court reviews those interpretations under the deferential abuse of discretion standard.⁴ See Hawkeye Nat'l Life Ins. Co. v. AVIS Corp., 122 F.3d 490, 497 (8th Cir.1997). Under that standard, the court will only disturb a trustee's interpretation if it is unreasonable.⁵ See id. A trustee's interpretation is reasonable if a reasonable person could have reached the same conclusion.⁶ See Hutchins v. Champion Int'l Corp., 110 F.3d 1341, 1344 (8th Cir.1997). However, even when the trustee's discretion is limited only by an obligation to act in good faith, the interpretation of the plan must also be reasonable "in light of the policies and protections embodied in ERISA." Central States, Southeast and Southwest Areas Pension Fund v. Central Transport, Inc., 472 U.S. 559, 568, 105 S.Ct. 2833, 86 L.Ed.2d 447 (1985). After reviewing the Trustees' interpretation of the Declaration, PPPD and Plan Summary against the backdrop of ERISA's protective purposes, the court finds defendant's assertion that claimants may not, at their own cost, record or transcribe a hearing on a denial of benefits is unreasonable and an abuse of discretion.

Defendant asserts that its interpretation is reasonable because the plan documents, ERISA and relevant U.S. Department of Labor regulations do not specifically require that benefits hearings be transcribed. The court would agree with defendant if plaintiff was seeking to force the Trustees to provide for transcription. However, the question is not whether transcription is required, but rather, whether the Trustees unreasonably abuse their discretion by refusing to allow a claimant to record the proceeding at his own cost.

The issue of a party's right to transcribe an administrative proceeding has arisen in a similar context. See Rosario v. Amalgamated Ladies' Garment Cutters' Union, Local 10, I.L.G.W.U., 605 F.2d 1228, 1240-42 (2nd Cir.1979). While Rosario was decided under the Labor-Management Reporting and Disclosure Act of 1959 ("LMRDA"), 29 U.S.C. § 411(a), rather than under ERISA, the issues and arguments closely parallel those now before the court. The underlying issue in Rosario was the extent of the union's disciplinary authority over its members. See Rosario, 605 F.2d at 1233. But as here, the plaintiff challenged the union's refusal to allow verbatim recording of a disciplinary hearing. See id. The union's arguments were also much like defendant's in this case. The union argued that because its constitution called for the appointment of a secretary to take notes of disciplinary hearings, any other record was proscribed. See id. at 1240. It further argued that allowing a verbatim record was contrary to "the general legislative policy of limited judicial intervention." Id. The union also suggested that allowing transcriptions would...