Gannon v. Plan
| Decision Date | 11 March 2011 |
| Docket Number | No. 09-cv-10368 (PGG),09-cv-10368 (PGG) |
| Parties | RICHARD GANNON, On His Own Behalf And On Behalf Of All Others Similarly Situated Plaintiff, v. NYSA-ILA PENSION TRUST FUND AND PLAN, FRANK M. McDONOUGH, ANTHONY PETRIZZO, MAURICE C. BYAN, JOSEPH CURTO, JOHN BOWERS, ALBERT CERNADAS, and STEPHEN KNOTT, Personally and In Their Capacity As Members Of The Board of Trustees Of The NYSA-ILA Pension Trust Fund And Plan Defendants. |
| Court | U.S. District Court — Southern District of New York |
In this putative class action brought under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq., Plaintiff Richard Gannon alleges that Defendants NYSA-ILA Pension Trust Fund and Plan ("Plan") and its Board of Trustees wrongfully denied pension benefits to Plaintiff and other similarly situated Plan participants. The Complaint pleads four claims for relief:
1. that in failing to credit Plaintiff for five years of service, Defendants failed to properly apply the terms of the Plan, in violation of Section 502(a)(1)(B) of ERISA;
2. that in failing to provide an updated summary plan description to Plan participants, Defendants violated Sections 502(a)(1)(A) and 502(c)(1)(B) of ERISA;
3. that Plaintiff is entitled to injunctive relief as against the individual defendants, pursuant to Section 502(a)(3) of ERISA, because they breached their fiduciary duties in allegedly failing to amend the Plan to bring it intocompliance with McDonald v. NYSA-ILA Pension Plan, No. 99-cv-9054 (PKC), 2004 WL 2050166, at *6 (S.D.N.Y. Aug. 4, 2004), aff'd, 450 F.3d 91, 95 (2d Cir. 2006) ("McDonald II"); and
4. that because the individual defendants breached their fiduciary duty to ensure that the Plan was amended to comply with McDonald II, they are liable-under Section 409(a) of ERISA-"to make good to such plan any losses to the plan resulting for each such breach."
(Cmplt. ¶¶ 27-51)
Pending before the Court are Defendants' motion to dismiss the third and fourth claims for relief, and motion to stay this action and remand the matter to the Board of Trustees. For the reasons stated below, Defendants' motion to dismiss the Complaint's third and fourth claims will be GRANTED, and the motion to stay the action and remand the matter to the Board of Trustees will be DENIED.
Plaintiff is a participant in the NYSA-ILA Pension Trust Fund and Plan, an ERISA-governed employee welfare benefit plan administered by Defendants. (Cmplt. ¶ 1) The Plan is a multi-employer joint labor-management trust fund organized and existing under § 302(c)(5) of the Taft-Hartley Act, 29 U.S.C. § 186(c)(5). (Affidavit of Charles Ward in Support of Defendants' Motion to Dismiss ("Ward Aff.") ¶ 2) Plaintiff worked continuously for the New York Shipping Association ("NYSA") between 1969 and 2009, except for a five-year period between 1974 and 1978.
In May 2009, Plaintiff sent a letter to the Plan requesting his "non-forfeitable accrued benefit statement." (Supplemental Affidavit of Charles Ward ("Ward Supp. Aff."), Ex. F) On June 9, 2009, the Plan's Executive Director sent a letter to Plaintiff informing him that hehad "a total of 31 years of accrued, credited service" and "a vested right to receive this pension." (Ward Supp. Aff., Ex. G) On June 30, 2009, Plaintiff submitted an application for pension benefits to the Plan. (Pauk Aff., Ex. 2) As part of his application, Plaintiff acknowledged that he was entitled to a gross monthly benefit of $3,720, correlating with 31 years of service. (Id. at 10) After a reduction for a survivor annuity benefit, Plaintiff further acknowledged that he was entitled to net monthly compensation of $2,957.40. (Id.)
On July 13, 2009, the Plan's Executive Director sent a letter to Plaintiff informing him that his pension was approved "at the rate gross of $3,720.00 per month and a net of $2,957.40 per month." (Pauk Aff., Ex. 3 (emphasis in original)) Defendants did not credit Plaintiff for the five years of service he accrued before his break in service in 1974. (Cmplt. ¶ 11)
On August 18, 2009, Plaintiffs counsel sent a letter to the Plan challenging the benefit determination.1 The letter, in its entirety, reads as follows:
I represent Mr. Richard Gannon, whose Authorization is enclosed.
On July 13, 2009, Mr. Gannon's Service Pension was approved retroactive to July 1, 2009. Although Mr. Gannon accrued 36 years of service, his pension was calculated on the basis of only 31 years, and he was awarded a pension of only $3,720 (31 x $120). Apparently, the Board decided not to credit the five years of service he accrued between 1969 and 1973 due to an interruption of his service
between 1974 and 1978.
This letter constitutes Mr. Gannon's claim to the five uncredited years, which will increase his pension to $4,320 ($120 x 36). In deciding his Claim, please specify which version of the Pension Plan you relied upon, with specific reference to the applicable Plan provisions. This letter is [sic] also requests that you provide mewith copies of all Plans and Summary Plan Descriptions applicable to Mr. Gannon's Claim.
I thank you in advance for a prompt decision on Mr. Gannon's Claim and a timely production of the requested documents.
On September 1, 2009, Plan counsel responded to Plaintiff's counsel's letter as follows:
Your letter to the Board of Trustees of the NYSA-ILA Pension Trust Fund has been forwarded to cocounsel for reply. Your letter requests copies of the Fund's plan documents applicable to Richard Gannon's claim and the identification of the provision upon which the Fund relied in making its determination concerning Mr. Gannon's pension application.
Since Mr. Gannon's final year of employment was in Contract Year 2009, the Fund's current Agreement and Declaration of Trust and Plan (ADT&P) governs his application for benefits. Accordingly, we enclose a copy of the Fund's January 29, 2009 ADT&P, including amendments. The provision upon which the Fund relied in not crediting Mr. Gannon for his period of employment from 1969 through 1973 is article III, section 4(c)(i) of the ADT&P. We also enclose a copy of the July 2003 Summary Plan Description (SPD) and an August 2006 memorandum setting forth the procedures for calculating a participant's years of credited service for vesting and accrual purposes. The SPD and memorandum provide guidance in applying the terms of the ADT&P to Mr. Gannon's application for benefits.
After you have had an opportunity to review the enclosed documents, cocounsel would like to meet to discuss Mr. Gannon's claim. Please contact either of the undersigned to arrange a meeting.
No meeting between counsel ever took place, and Plaintiff's counsel subsequently requested that his August 18, 2009 letter be "treated as Mr. Gannon's appeal of the Fund's determination." (Ward Aff., Ex. D.)
On December 18, 2009, 123 days after Plaintiff challenged Defendants' initial benefit determination, the Plan's Trustees issued a decision denying Plaintiff's appeal. In rejecting Plaintiff's claim that he should receive credit for the fiveyears of service before his break in service, the Trustees relied on Article III, § 4(c)(i) of the Plan, commonly known as the "rule of parity":
....The Fund's Executive Director determined that Mr. Gannon had accrued 31 years of credited service for his work years from 1979 through 2009 but was not entitled to accrue any years of credited service for work years from 1969 through 1973 because of his five-year break in service. That determination was based on article III, section 4(c)(i) of the Fund's Agreement and Declaration of Trust and Plan (ADT&P), which provides as follows:
[Effective January 1, 1976, a Participant who is not vested in his or her accrued benefit shall lose all prior years of credit service for purposes of vesting and accrual of benefits at such time as the Participant's consecutive Break-in-Service Years equal the Participant's total years of credited service prior to such Break-in-Service Years. Upon return to the industry the Participant shall be considered a new employee.
The Executive Director's determination was correct. When Mr. Gannon suffered his break in service, the Employee Retirement Income Security Act provided that a participant became vested upon earning at least ten years of credited service. Since Mr. Gannon had worked only five years, he had not yet become vested. In accordance with article III, section 4(c)(i) of the Fund's ADT&P he lost those years of service for accrual purposes because the number of his consecutive break-in-service years (five) equaled the number of his years of service before the break-in-service years (five). Upon returning to the industry in 1979[,] Mr. Gannon earned 31 years of credited service without incurring a break in service. Accordingly, Mr. Gannon is entitled to receive monthly pension benefits based on those 31 years of service. Mr. Gannon's appeal is denied.
(Ward Aff., Ex. D.)
The cover letter accompanying the Board of Trustees' decision informs Plaintiff that he has exhausted his administrative remedies and may seek judicial review:
Richard Gannon's request for additional benefits was considered by the Fund's Board of Trustees. A copy of the Board's determination is enclosed. The Board's decision is conclusive, final and binding. In accordance with 29 C.F.R. § 2560.503-1(j)(4), Mr. Gannon has the right to commence an action in accordance with section 502(a) of the Employee Retirement Income Security Act of 1974, 29 U.S.C. 1132(a).
(Id.)
Plaintiff filed this action on December 21, 2009. Plaintiff contends that Defen...
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