Kaszuk v. Bakery and Confectionery Union and Industry Intern. Pension Fund

• Decision Date: 20 June 1986
• Docket Number: Nos. 85-1513,85-2385,s. 85-1513
• Citation: 791 F.2d 548
• Parties: , 5 Fed.R.Serv.3d 126, 7 Employee Benefits Ca 1724 Josephine KASZUK, Plaintiff-Appellee, v. BAKERY AND CONFECTIONERY UNION AND INDUSTRY INTERNATIONAL PENSION FUND, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 548

791 F.2d 548

54 USLW 2656, 5 Fed.R.Serv.3d 126,

7 Employee Benefits Ca 1724

Josephine KASZUK, Plaintiff-Appellee, v. BAKERY AND CONFECTIONERY UNION AND INDUSTRY INTERNATIONAL

PENSION FUND, Defendant-Appellant.

Nos. 85-1513, 85-2385.

United States Court of Appeals, Seventh Circuit.

Argued June 10, 1985.

Decided May 23, 1986.

Rehearing Denied June 20, 1986.

Margery Sinder Friedman, Morgan, Lewis & Bockius, Washington, D.C., for defendant-appellant.

John G. Jacobs, Plotkin & Jacobs, Chicago, Ill., for plaintiff-appellee.

Before COFFEY and EASTERBROOK, Circuit Judges, and GRANT, Senior District Judge. ^*

PER CURIAM.

Defendant-appellant challenges the district court's granting of summary judgment to plaintiff-appellee on her claim that defendant-appellant breached its fiduciary duty to inform plaintiff-appellee's deceased husband of the steps that he had to take to elect a pre-retirement husband-and-wife pension plan. Defendant-appellant also contests the district court's award of injunctive relief. We affirm in part and reverse in part.

Facts

Plaintiff-appellee's husband, Walter Kaszuk, worked as a dough mixer for the National Biscuit Company (Nabisco), in Chicago. During twenty-one of his twenty-three years of employment at Nabisco, Mr. Kaszuk contributed to, and participated in, the defendant-appellant, the Bakery and Confectionery Union and Industry International Pension Fund [hereinafter referred to as the Fund]. Mr. Kaszuk had a tenth grade education and Mrs. Kaszuk had an eighth grade education. The Kaszuks fairly represent the typical Fund participants and beneficiaries.

Prior to 1976, the Fund, a labor-management trust fund established pursuant to Sec. 302(c)(5) of the Labor Management Relations Act, 29 U.S.C. Sec. 186(c)(5) and the Employee Retirement Income Security Act, 29 U.S.C. Secs. 1001-1461 [hereinafter referred to as ERISA], provided no pre-retirement pensions for the spouses of employees. In 1976, pursuant to Congressional mandate, see 29 U.S.C. Secs. 1055, 1061(b), the Fund created a pre-retirement husband-and-wife pension. This pension provided benefits to an employee's spouse if the employee elected coverage before retiring. If an employee elected the pre-retirement husband-and-wife pension, the Fund reduced the employee's retirement benefit by an amount equal to .8% of the monthly benefit to which he was otherwise entitled multiplied by the number of years over which the option was elected. A participant's election did not become effective until two years after it was filed; however, the Fund waived the two-year waiting period for participants who died as the result of an accident after making their elections or who filed their elections by March 31, 1978. The new pension became available on June 1, 1976.

The Fund notified its participants of the pre-retirement husband-and-wife pension in the October 1976 issue of the B & C News which was the newspaper of the union to which Mr. Kaszuk and his co-workers belonged. The notice appeared as a one and one-half column advertisement on page seven of the eight page publication under the heading: "BAKERY AND CONFECTIONERY UNION AND INDUSTRY INTERNATIONAL PENSION FUND." The ad's caption read: "Important Notice, Husband and Wife Option." The text of the ad set forth, in varying degrees of clarity, the effective date of the new pension, the eligibility requirements, the charge for electing, the two-year waiting period, and a form to be used for electing or rejecting the option even though the participant could reject the option by doing nothing.

The Fund reran the ad fourteen months later in the November-December 1977 issue of the B & C News. The title of the ad in its second publishing read: "Important Notice, Husband and Wife (Spouse) Option." The ad also contained a misprint in the first paragraph. The misprint obscured certain eligibility requirements. This ad appeared on page seven of the twelve page newspaper. Page seven had a title which read: "Focus on Pensions and Health Benefits," and also contained examples, in addition to those in the October 1976 ad, which demonstrated how the option worked.

The Fund also informed its members about the availability of the pension option in its 1976 and 1977 "Rules and Regulations" booklets. The booklets contained all the rules of the Fund. Finally, in August 1978, the Fund distributed a "Summary Description Booklet" which notified Fund participants about the election procedures. ¹ The Fund distributed all of these booklets by leaving them in stacks at various locations in the Nabisco plant.

Mr. Kaszuk suffered a major heart attack and died in August 1978. Shortly after his death, Mrs. Kaszuk filed an application for benefits with the Fund. The Fund denied Mrs. Kaszuk's application because Mr. Kaszuk had never elected the Fund's pre-retirement husband-and-wife option. After exhausting her intrafund appeal remedies, Mrs. Kaszuk filed this lawsuit.

Brought under 29 U.S.C. Sec. 1132, Mrs. Kaszuk's complaint alleged that Mr. Kaszuk failed to elect the pre-retirement pension only because the Fund failed to notify him adequately of the pre-retirement husband-and-wife pension's election procedures, that the Fund's failure to provide adequate notice violated fiduciary obligations set forth in ERISA, 29 U.S.C. Sec. 1104, and that Mr. Kaszuk would have made the necessary election if the Fund had met its obligation of adequately notifying him. Mrs. Kaszuk requested:

A. That the Court declare that defendants have violated applicable law in the respects alleged;

B. That the Court require defendants to pay to plaintiff until her death the pension she is entitled to as survivor of Walter Kaszuk;

C. That the Court require defendants to pay to plaintiff all back payments under the pension plan that have been denied to her as aforesaid;

D. That the Court award plaintiff her costs and attorneys' fees in connection with the bringing of this suit; and

E. That the Court award plaintiff such further or other relief as it shall deem appropriate.

Complaint at 5-6.

Mrs. Kaszuk originally joined Mr. Kaszuk's local union, Local 300, as a defendant in this lawsuit. The two entered into a settlement agreement on August 14, 1984. The settlement provided a small lump sum payment to Mrs. Kaszuk and called for the Union to post and mail a simple letter explaining the pre-retirement husband-and-wife pension to each of Local 300's members. Within the forty days following the mailing of the notice, approximately 270 of the Local's approximately 5,000 members elected the option. In the prior eight years, the Fund had received approximately 600 elections from its entire membership which numbered around 95,000.

In November 1984, the district court granted Mrs. Kaszuk partial summary judgment holding that, as a matter of law, the Fund breached its fiduciary duty to notify Mr. Kaszuk of the election requirement. In a January 1985 Memorandum and Opinion, the district court placed upon the Fund the burden of proving whether Mr. Kaszuk received actual notice of the election requirement and whether Mr. Kaszuk would not have elected pre-retirement coverage if he had received notice. Finally, in a February 1985 decision, the district court granted Mrs. Kaszuk's request for summary judgment on the remaining portion of the liability issue. Pursuant to Rule 54(b), Federal Rules of Civil Procedure, the district court ordered that the liability issue was final for the purpose of appeal.

On January 17, 1985, before the district court had made its final ruling on the issue of liability, Mrs. Kaszuk filed Plaintiff's Supplemental Memorandum of January 17, 1985, In Support of Her Motion For Summary Judgment in which she raised questions regarding prejudgment interest, statutory attorney's fees, the date from which the Fund was liable, Mrs. Kaszuk's entitlement to an increase in the amount of the Fund's payments, and injunctive relief. While the Fund's appeal from the granting of summary judgment on the issue of liability was pending before this Court, the district court determined the remaining issues. The Fund has filed a second appeal contesting the district court's award of injunctive relief. We have consolidated the two appeals.

Issues

This Court has four issues before it on appeal:

I. Whether this Court has jurisdiction to hear this appeal;

II. Whether the district court improperly determined that the Fund breached its fiduciary duty;

III. Whether the district court improperly determined that Mr. Kaszuk did not receive actual notice of the pension option and that Mr. Kaszuk would have elected the option if he had received notice; and,

IV. Whether the district court properly granted injunctive relief.

______________________

Issue I. Whether this Court has jurisdiction to hear this appeal.

Neither party raised the issue of jurisdiction in its briefs or arguments. Nevertheless, federal appellate courts do "not acquire subject matter jurisdiction by the consent of the parties, ... we have an independent obligation to police the constitutional and statutory limitations on our jurisdiction, ..." Minority Police Officers Association of South Bend v. City of South Bend, Indiana, 721 F.2d 197, 199 (7th Cir.1983) (citations omitted), and "an independent obligation to make sure we do not exceed it." A/S Apothekernes Laboratorium For Specialpraeparater v. I.M.C. Chemical Group, Inc., 725 F.2d 1140 (7th Cir.1984). Consistent with these maxims, this Court raised the issue of jurisdiction at oral argument and the parties' counsels, who have a professional obligation to assist the Court in determining the question of jurisdiction, Minority Police Officers Association, 721 F.2d at 199, filed briefs on the matter.

Even though many questions remained between the parties, the district court, having granted summary judgment to Mrs. Kaszuk on the issue of liability, directed the entry of final judgment on the liability issue pursuant to ...