Hayes v. Twin City Carpenters & Joiners Pension Plan
| Decision Date | 10 July 2019 |
| Docket Number | File No. 17-cv-05267 (ECT/BRT) |
| Parties | Steven Hayes, Plaintiff, v. Twin City Carpenters & Joiners Pension Plan, et al. Defendants. |
| Court | U.S. District Court — District of Minnesota |
Gregory R. Merz and John M. Nichols, Gray Plant Mooty, Minneapolis, MN for Plaintiff Steven Hayes.
Amanda R. Cefalu and Henry M. Helgen, III, Kutak Rock, Minneapolis, MN for Defendants Twin City Carpenters & Joiners Pension Plan, et al.
In this ERISA lawsuit, Plaintiff Steven Hayes seeks to recover pension benefits from Defendant Twin City Carpenters & Joiners Pension Plan ("the Plan"). The Plan began paying Hayes a monthly retirement benefit in March 2011. The Plan suspended his benefits in October 2013, after receiving information suggesting Hayes may have violated a Plan rule that prohibited pensioners from working in certain employment for forty hours or more per month. Following a lengthy administrative-appeal process, the Plan's Claim Appeals Committee affirmed the initial decision to suspend Hayes's benefits. Hayes and Defendants have filed cross-motions for summary judgment. Should their summary-judgment motion be denied with respect to Hayes's benefit claim, Defendants alternatively seek remand of that claim. Defendants' summary-judgment motion will be granted against Hayes's breach-of-fiduciary duty claim. The benefits claim will be remanded to the Committee for further consideration consistent with this Opinion and Order and in all other respects, the Parties' summary-judgment motions will be denied. To summarize, the administrative process that led to the decision to suspend Hayes's benefits was flawed, though not so seriously as to warrant heightened or de novo review of the Committee's final decision. But the Committee's decision cannot survive abuse-of-discretion review. This is because the Committee adjudicated Hayes's claim under inapplicable Plan terms, nothing about the Committee's decision or adjudicative process suggests it considered or construed applicable terms that, when examined closely, are materially different from the terms the Committee considered, and the terms the Committee should have applied pose significant interpretive challenges. Because it remains unclear whether Hayes is entitled to the benefits he seeks, a remand is the appropriate remedy.
December 2010 to March 1, 2011—Hayes applies for, and is approved to receive, unreduced early retirement benefits under the Plan. The Plan is a multi-employer pensionfund, Compl. ¶¶ 2, 7 [ECF No. 1]; Answer ¶ 2 [ECF No. 9], and Hayes is a participant in the Plan, Compl. ¶¶ 6, 13; Answer ¶¶ 6, 13. In December 2010, Hayes applied to the Plan for "Unreduced Early Retirement Benefit[s]" commencing March 1, 2011. AR 423-25, see also AR 755, 1192-93; Defs.' Mem. in Supp. at 4 [ECF No. 39]; Pl.'s Mem. in Supp. at 4 [ECF No. 40]. In his application, Hayes identified February 28, 2011, as the last date he "worked, or will work, in the Construction Industry." AR 423. The Plan prohibited retired participants who received benefits from being employed or engaging in work under certain circumstances. AR 770-74, 1194-97. The Plan referred to this generally as "Disqualifying Employment"—as in, employment that, if engaged in by the retiree, might disqualify the retiree from receiving benefits. AR 770, 1194-95.2 In his application for benefits, Hayes acknowledged his obligation to comply with these limitations. AR 425. The Plan approved Hayes's claim and began paying a monthly benefit effective March 1, 2011. AR 422.
October 2013—The Plan suspends Hayes's benefits for engaging in Disqualifying Employment. In a letter dated October 15, 2013, the Plan, through its Fund Administrator, notified Hayes that it had "been informed that [he was] performing Disqualifying Employment while continuing to receive [his] pension," and that as a result his pensionbenefits would be "suspended effective November 1, 2013." AR 329-31. Under the Plan, as the Administrator explained in the letter, "Disqualifying Employment" was: "Any employment of forty (40) hours or more in a one (1) month period in Covered Employment (defined as Employment for which an Employer has agreed to contribute to the Pension Fund pursuant to the terms of a written Collective Bargaining Agreement or Participation Agreement)." AR 330. The Administrator also quoted an "exception" to the general suspension-of-benefit rule as follows:
Effective April 1, 2007, if you work more than forty (40) hours per month in Covered Employment, the Plan will not suspend your benefit unless your work in Covered Employment in that month and the previous eleven (11) months totals more than four hundred eighty (480) hours. If you have worked or been paid for four hundred eighty (480) or more hours in Covered Employment in the last twelve (12) months, your benefit will be suspended. If you have worked or been paid for any Disqualifying Employment that is not Covered Employment during the twelve (12) month period, you are not eligible for this exception to the rule and the Plan will suspend your benefit for any month in which you work more than forty (40) hours in Disqualifying Employment.
Id. The Administrator did not say whether it had considered this exception in Hayes's case. See AR 329-31. The Administrator notified Hayes that, to obtain reinstatement of his pension benefit, he "must cease working in Disqualifying Employment and notify [the Plan] in writing that [he had] done so." AR 331. The Administrator requested copies of Hayes's tax returns for the years 2011, 2012, and 2013, and notified Hayes "that any pension payments [he] previously received while working in Disqualifying Employment will need to be reimbursed to the Plan." Id. The Administrator explained that, if he believed the suspension of his benefits was erroneous, Hayes could "contact theAdministrator to provide any information [he] may have to assist in resolving this issue." Id. The Administrator also informed Hayes that he had "the right to appeal this decision to the Board of Trustees" and referred Hayes to the appeal-rights provisions of the Summary Plan Description. Id. The Administrator did not describe in this letter the information or rationale upon which it based its decision to suspend Hayes's benefits. See AR 329-31.
November 2013—Hayes disagrees with the Plan's suspension of his benefits; the Plan responds and clarifies its explanation for suspending benefits, and Hayes appeals. Hayes responded to the Administrator in a letter dated November 4, 2013. AR 333. In his letter, Hayes wrote that he disagreed with the determination that he was performing Disqualifying Employment and requested copies of "all documents, records, and other information relevant to [his] claim," as permitted by the Plan. Id. (emphasis omitted). In a letter dated November 8, the Administrator denied Hayes's request for documents relevant to his claim. AR 334-35. The Administrator explained that Hayes's request for documents could be approved only if he appealed the decision to suspend his benefits and that, before the Plan would permit him to appeal, Hayes must first "explain 'why the determination should be reviewed.'" AR 334. The Administrator also explained that, before he would be allowed to appeal, Hayes must provide information regarding (what the Administrator previously determined to be) his Disqualifying Employment. Id. Finally, the Administrator took the position that, because in its view Hayes had failed to notify the Plan of the Disqualifying Employment, the Plan was "entitled to 'presume that [Hayes had] worked for at least forty (40) hours in that month and any subsequent month'"and that Hayes now had the burden of "demonstrating to the satisfaction of the Trustees" that his benefits should not have been suspended under the Plan. AR 334-35. Hayes responded with a letter to the Administrator on November 14. AR 336. In it, he wrote that he disagreed with the Administrator's determination and that "the purpose of this letter is to file a formal appeal of that determination." Id. Hayes requested that his appeal include "a more thorough investigation that includes information from me and my employer, which it does not appear was part of the original determination." Id. In a second letter dated November 18, Hayes provided information regarding his continued employment in response to the Administrator's request. AR 337. Hayes identified his employer as Alltech Engineering Corporation in Mendota Heights, Minnesota, id.—the same employer for whom Hayes had worked before he retired, AR 378. He described his job title as "Project Manager" and his duties as sales, estimating, and managing industrial projects. AR 337.
December 2013—Hayes retains counsel, who contacts the Plan and elicits additional explanation for the Plan's decision to suspend Hayes's benefits. Hayes retained counsel, who wrote to the Administrator on December 19, 2013, repeating Hayes's request for records. AR 338-39. Hayes's lawyer explained that his "objective in assisting Mr. Hayes [was] to facilitate a resolution of this issue, and to provide a clearer understanding for both parties as to the limited nature of Mr. Hayes' employment with a contributing employer, so as to avoid issues in the future." AR 339. The Plan responded through its counsel in a letter dated December 30. AR 340-42. In that letter, the Plan's counsel wrote that, owing to the "confusing" procedural posture of Hayes's claim and "due to some loose usage of terms in communications between the parties," counsel would "explain the Plan'sposition on the issue." AR 340. The Plan's counsel disclosed that "a routine payroll audit of Alltech" showed that Hayes had "done some work for pay" at Alltech after his pension benefits commenced. Id. Counsel summarized a Plan term that he characterized as requiring retirement-benefit recipients "to notify the Plan if he or she is starting any type of work that is or may be disqualifying even if...
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