Johannssen v. District No. 1—Pacific Coast Dist., No. Civ.A. AMD 96-2355.

• Decision Date: 29 March 2001
• Docket Number: No. Civ.A. AMD 96-2355.
• Citation: 136 F.Supp.2d 480
• Parties: Howard E. JOHANNSSEN, Marvin E. Long and Donna C. Fisher, Plaintiffs, v. DISTRICT NO. 1—PACIFIC COAST DISTRICT, MEBA Pension Plan, Defendant.
• Court: U.S. District Court — District of Maryland

Page 480

136 F.Supp.2d 480

Howard E. JOHANNSSEN, Marvin E. Long and Donna C. Fisher, Plaintiffs, v. DISTRICT NO. 1—PACIFIC COAST DISTRICT, MEBA Pension Plan, Defendant.

No. Civ.A. AMD 96-2355.

United States District Court, D. Maryland.

March 29, 2001.

Cyril V. Smith, Zuckerman, Spaeder, Taylor, Goldstein & Better, Baltimore, MD, for plaintiffs.

Christine Williams, Gordon, Feinblatt, Rothman, Hoffberger & Hollander, Baltimore, MD, Marilyn L. Baker, Elizabeth A. Saindon, Richard W. Gibson, Money, Green, Gleason, Baker, Gibson & Saindon, Washington, DC, for defendant.

MEMORANDUM

DAVIS, District Judge.

I. INTRODUCTION

This case, arising under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001, et seq., involves a dispute between three former union employees, plaintiffs Howard E. Johannssen, Marvin E. Long and Donna C. Fisher, and one of the pension plans operated by the union for which they worked. The defendant plan is the District No. 1 — Pacific Coast District, Marine Engineers Beneficial Association Pension Plan (hereinafter, "the Plan"). The questions presented are whether one or more of the plaintiffs are entitled to past service credit under the Plan in accordance with the terms of a controversial 1992 Amendment to the Plan Document, the contract specifying the terms of the pension benefits, and if so, what amount of credit each should receive.¹

Following the completion of the initial round of discovery, the parties filed cross-motions for summary judgment. After considering those motions, I concluded that disputes of material fact with respect to the validity and enforceability of the 1992 Amendment required a trial of those issues. See 1997 WL 580827 (D.Md. August 8, 1997). Thereafter, following a three day bench trial, I issued an Order declaring that the 1992 Amendment "became effective upon its adoption." I remanded the case to the Plan Administrator to permit the Plan Administrator to calculate what past service credit, if any, plaintiffs were due. Subsequently, the Plan Administrator issued a series of determination letters dated July 1, 1999, November 19, 1999, and March 7, 2000, concerning the past service credit to which each plaintiff was entitled under the 1992 Amendment. The Plan Administrator determined that Johannssen was entitled to only 12 years past service credit; he had requested 21 years. He also awarded Long only 12 years past service credit; Long had requested 23 years. Finally, he determined that Fisher was entitled to no past service credit; she had requested eight years.

Now pending are the parties' further cross-motions for summary judgment in respect to the Plan Administrator's determinations. Plaintiffs assert that the Plan Administrator abused his discretion by (1) ceding his decision-making discretion to defense counsel and (2) rendering determinations as to the plaintiffs' entitlement to benefits which disregard the clear language and intent of the 1992 Amendment. Defendant argues that the benefit determinations should be upheld as they were not tainted by a conflict of interest and the Plan Administrator committed no abuse of discretion; rather, argues defendant, the determinations were based upon a reasoned and principled interpretation of the Plan Document, including the 1992 Amendment. All issues have been fully briefed and no additional hearing is required.

In Part II of this Memorandum, I shall set forth my findings of fact and conclusions of law as required by Fed.R.Civ.P. 52(a) as to the issues regarding the validity and enforceability of the 1992 Amendment. I explain why the plaintiffs have established by a preponderance of evidence that the 1992 Amendment is indeed valid and enforceable. In Part III of this Memorandum, I shall address the pending cross-motions for summary judgment. I explain why, as a matter of law, the Plan Administrator abused his discretion in determining plaintiffs' eligibility for past service credit. For the reasons set forth, I am persuaded that, as a matter of law, plaintiffs are entitled to pension credit for past service as follows: Johannssen, 21 years; Long, 23 years; and Fisher seven and one half years.

II. THE 1992 AMENDMENT TO THE PLAN DOCUMENT IS VALID AND ENFORCEABLE

In this part of the opinion, I shall set forth my findings of fact and conclusions of law, based on the evidence adduced at trial and the undisputed facts established in the summary judgment record, bearing on the vigorously disputed questions of the validity and enforceability of the 1992 Amendment. In light of the circumstances of the pervasive corruption at the core of the merged union by which the plaintiffs were employed (as discussed below), I expressed a robust skepticism that the 1992 Amendment was valid and enforceable in my earlier ruling denying the cross-motions for summary judgment. Nevertheless, the evidence of record leaves no room to doubt that the 1992 Amendment was duly effected by the entity with the authority to do so and that none of the plaintiffs was culpably involved in the corruption that characterized the formation and administration of their employer, the sponsor of the Plan. Accordingly, for the reasons set forth herein, the Plan erred in refusing to give effect to the 1992 Amendment when it calculated the pension benefits to which the plaintiffs are entitled.

A. The Plaintiffs' Employment History

Although the plaintiffs have permissibly joined their claims in this unitary action, each has a unique historical connection to the Plan and to the smorgasbord of unions and collective bargaining organizations through which, and out of which, the claims in this case arise.

1. Howard E. Johannssen

From April 1968 until March 1977, Howard E. Johannssen was employed by the Federal Aviation Administration ("FAA") in New York. Shortly after Johannssen began working for the FAA, in 1969, he was elected as an officer of Local 3341 of the American Federation of Government Employees ("AFGE"), and thereby commenced a virtual lifetime of involvement in union organizing and union administration. He served in this position until December 1975.

In June 1974, Johannssen had begun working to form a new union representing non-air-traffic controller employees of the FAA. These efforts were undertaken on behalf of two unions: the Professional Air Traffic Controllers Organization ("PATCO") and District No. 1 — Pacific Coast Division, Marine Engineers' Beneficial Association ("PCD").² In 1977, Johannssen resigned from the FAA. He was elected president of the newly-organized Professional Airways Systems Specialists ("PASS"), a union that was sponsored and supported financially by PATCO and PCD. In 1982, PASS became an affiliate of PCD.

Thus, from 1977 to 1994, Johannssen was employed by PASS, as well as other unions associated or affiliated with PCD and its successor, District No. 1 — MEBA/ NMU ("MEBA/NMU"). Ultimately, Johannssen ascended to the top tier of union management when, in 1991, PASS merged with MEBA/NMU and Johannssen became a vice-president of MEBA/NMU and a member of MEBA/NMU's governing body, the District Executive Committee ("DEC"). Johannssen remained employed by the merged union until September 1994, when he terminated his employment with PASS. Upon terminating his employment with PASS, Johannssen received severance pay in the amount of $108,687.63, pursuant to a written agreement. These payments were completed approximately ten months after Johannssen left PASS.

While Johannssen was still employed by the FAA, i.e., before he left the FAA to organize PASS and to serve as its president, senior PCD officials repeatedly promised him (apparently as an inducement for him to resign from the FAA and undertake full-time union organizing efforts) that he would be awarded pension credit for his service prior to joining PASS, and for his time serving as an employee and officer of PASS, which had no pension plan. Specifically, these promises were made by Jessie Calhoon (then the President of PCD), C. Eugene DeFries (who succeeded Calhoon as President of PCD, and later the first President of PCD's successor, MEBA/NMU) and Michael J. Rock, a senior representative of PATCO acting on behalf of PCD and at the instruction of Calhoon. Rock was, at various times, paid by PCD to work on organizing the PASS union. Johannssen relied on these promises, withdrew his employee contributions to the federal pension plan maintained by the FAA, and thereby forfeited the employers' contributions to that plan. The former Plan Administrator, Lucille Hart, testified that Johannssen had related the same history to her, and that she had no reason to doubt his account.³

As mentioned above, from April 1968 through February 1977, while he was employed by the FAA, Johannssen participated in the Civil Service Retirement System ("CSRS"), the general pension system for federal employees. Attendant to his resignation from the FAA to work for PASS, Johannssen withdrew his employee contributions to the CSRS (in the amount of approximately $10,000), and thereby forfeited the employer contributions to that plan. He used these funds to move his household to Washington, D.C., and to pay daily living expenses while he organized, without pay, the new union for the benefit of PATCO and PCD. Johannssen is not currently entitled to any benefits under CSRS for his years of work at the FAA. Nor did he at any time obtain any benefits under CSRS.

From 1977 until approximately 1989, while Johannssen was employed by PASS, he accrued no pension benefits. He expected that the promises made by Calhoon, DeFries and Rock would be honored, and that he would receive pension credit for these years of employment. In May 1989, 12 years after he began his work for PCD, Johannssen became a participant in the Plan. At that time, however, no provision was made by the union to award past service credit to Johannssen.

2. Marvin E. Long

Marvin E. Long was employed by the...