Knepper v. Volvo Grp. N. Am.

• Decision Date: 27 September 2019
• Docket Number: Civil Action No. ELH-18-02879
• Parties: RONNIE KNEPPER, Plaintiff, v. VOLVO GROUP NORTH AMERICA, et al., Defendants.
• Court: U.S. District Court — District of Maryland

RONNIE KNEPPER, Plaintiff,
v.
VOLVO GROUP NORTH AMERICA, et al., Defendants.

Civil Action No. ELH-18-02879

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

September 27, 2019

MEMORANDUM OPINION

This case arises under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), 29 U.S.C. § 1001 et seq., and primarily concerns a dispute regarding the calculation of retirement benefits. See ECF 12 ("Amended Complaint"). Plaintiff Ronnie Knepper accrued pension benefits over the course of his 22-year employment with Mack Trucks ("Mack") and its successor, Volvo Group North America ("VGNA" or "Volvo"). Various pension plans were in effect during Knepper's employment.

Knepper claims that defendants VGNA and The Volvo Group North America Retirement Plan ("VGNA Plan") have "failed to properly calculate" and pay the pension benefits to which he is entitled. He alleges that, following his retirement on August 1, 2013, VGNA "incorrectly" calculated his "benefits payment amounts and retirement date" and failed to provide him "with all options and timing of benefit payments." ECF 12, ¶ 79. According to plaintiff, defendants incorrectly used his earnings from 1987 to 1991 to calculate his benefits under a non-union contributory plan in which he participated before he transferred to a union position in 1991.

Under that plan (hereinafter sometimes called the "Contributory Plan"), Knepper receives a pension benefit of $148.53 per month. Id. ¶ 34. But, Knepper maintains that defendants should have calculated his pension benefit using his highest average wage from 2005 to 2009, after he

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transferred to the union benefit plan. This would yield a monthly benefit of $294.29 under the Contributory Plan. Id. ¶ 36. In the alternative, plaintiff seeks "equitable estoppel and reformation of the Plans to conform to the Defendants' historical practice" with respect to "similarly situated participants." Id. at 13 (Prayer for Relief).

Plaintiff also complains that defendants failed to pay him any benefits under any plan for the first 34 months following his retirement. Id. ¶¶ 62-67. In addition to recovery of those benefits, plaintiff seeks attorneys' fees and costs. Id. at 13.

Based on these allegations, the Amended Complaint contains three counts: "Denial of Benefits and Rights" under § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B) (Count I); "Breach of Fiduciary Duty" under § 502(a)(3), 29 U.S.C. § 1132(a)(3) (Count II); and Violation of § 502(c), 29 U.S.C. § 1132(c) (Count III). Id. ¶¶ 76-96. Two exhibits are appended to the suit.

Defendants have moved to dismiss the Amended Complaint pursuant to Fed. R. Civ. P. 12(b)(6) or, in the alternative, for summary judgment under Fed. R. Civ. P. 56. ECF 14. The motion is supported by a memorandum of law (ECF 14-2) (collectively, the "Motion") and six exhibits (ECF 14-4-14-9). Knepper opposes the Motion. ECF 17 ("Opposition"). He argues that the "Motion is an improper attempt to have the Court make a benefit determination without the benefit of the full administrative record." Id. at 1. Defendants have replied. ECF 18.

No hearing is necessary to resolve the Motion. See Local Rule 105.6. For the reasons that follow, I will grant the Motion in part and deny it in part.

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I. Factual Background¹

Knepper, who is "over the age of sixty-five" (ECF 12, ¶ 8), began working for Mack in 1972 and retired from VGNA on August 1, 2013. Knepper was an employee in the engineering department. ECF 12-3, ¶3. During that time, he accrued pension benefits under various pension plans: Mack's optional Contributory Pension Plan, a part of the Mack Non-Bargaining Unit Employees Plan ("NBE Plan"); the Mack/United Auto Workers ("UAW") Pension Plan ("UAW Plan"); and the Volvo Group North America Retirement Plan, also called the "Cash Balance Plan" (collectively, the "Plans"). ECF 12, ¶¶ 12, 13, 16, 20, 22. The calculation of benefits issue concerns the Contributory Plan, which is part of the NBE Plan, and the UAW Plan.

When Knepper began his employment with Mack in 1972, he was a "non-union employee." Id. ¶ 9. From 1972 until approximately June 1991, he "worked in positions that were not in a collective bargaining unit." Id. ¶ 11. From November 1, 1986 through June 9, 1991, Knepper "participated in the optional" Contributory Plan, which was part of the NBE Plan. Id. ¶¶ 12, 13. He "contributed to the Mack Contributory Plan through payroll deductions." Id. ¶ 14. Both the "Contributory Plan" and the "Non-Contributory Plan," referred to in the Amended Complaint, appear to be part of the NBE Plan.

In 1991, Knepper's "job at Mack was converted into a bargaining unit position covered by a collective bargaining agreement" between Mack and the UAW. Id. ¶ 15. Therefore, after June 9, 1991, he "became an inactive participant" in the NBE Plan. Id. ¶ 18. Instead, Knepper "became a participant" in the UAW Plan. Id. ¶ 16.

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"As an inactive participant" in the NBE Plan, Knepper "no longer contributed" to the NBE Plan, but "his accumulated funds remained in the plan." Id. ¶ 19. Moreover, Knepper "began to accrue rights to benefits under the Mack/UAW Plan that were independent from any rights to benefits he had accrued" under the NBE Plan. Id. ¶ 17.

On or about May 1, 2000, "VGNA purchased Mack," and all Mack employees, including Knepper, became VGNA employees. Id. ¶ 21. According to the Amended Complaint, "in or around 2006, the NBE Plan merged into the VGNA Plan." Id. ¶ 22. As a result of this merger, plaintiff is "now entitled to benefits from the VGNA Plan." Id. ¶ 23.

On August 1, 2013, Knepper retired from VGNA, after 22 years of employment with Mack and then VGNA. Id. ¶ 25. He accepted an early retirement incentive bonus from VGNA, provided pursuant to a Memorandum of Understanding ("MOU") between Mack and the UAW, dated July 2, 2013. Id. ¶¶ 56-61.

Knepper claims that at the time of his retirement, "he was given incomplete information as to his available retirement benefits." Id. ¶ 26. Specifically, he contends that "Volvo representatives failed to give him a breakdown of how Volvo had calculated his benefit." Id. ¶ 30. According to Knepper, he was not informed of his right to take his benefits as a lump sum payment. ECF 12, ¶¶ 52, 53. He also alleges that Volvo failed to provide him with annual statements from the NBE Plan after 2003 and did not provide him with Plan documents prior to 1994, when requested. Id. ¶¶ 54, 55.

As a result of the allegedly inaccurate, incomplete, and contradictory information, Knepper "did not sign the paperwork that VGNA and/or Plan representatives told him he had to sign to begin receiving benefits." Id. ¶ 27. Knepper explains that he refused to sign due to "fear he would arguably be waiving his right to be paid the correct benefit amounts," and consequently he has

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"not received the proper benefits from the VGNA Plan or the predecessor Mack/UAW Plan." Id. ¶ 28.

With respect to the NBE Plan, Knepper contends that defendants "failed to correctly calculate" his benefit amount. Id. ¶ 29. He complains that defendants calculated his benefits under the NBE Plan "by using wages prior to 1991 to determine his 'Highest Final Average Wages.'" Id. ¶ 32. He adds that defendants "incorrectly used" his wages from 1987 to 1991 (the years he contributed to the NBE Plan), to calculate a "monthly benefit of $148.53" with respect to the NBE Plan. Id. ¶ 34. But, according to plaintiff, the "Highest Final Average Wages are the five consecutive years with the highest average wage." Id. ¶ 33. And, he insists that defendants should have used his overall "highest final average wage for the five years leading up to" his retirement in 2013. Id. ¶ 35. In his view, based on his wages from 2005 to 2009, he is entitled to receive $249.29 per month under the NBE Plan. Id. ¶ 36.

Central to Knepper's complaint concerning his benefit calculation is his claim of an alleged conflict between two provisions of the 2001 NBE Plan: Section 1.26 and Section 5.7. Knepper asserts that these provisions set forth conflicting instructions as to how his benefit should have been calculated. In Knepper's view, his benefit amount should not have been determined as of 1991, when he became a union employee. Rather, his earnings after 1994 and through 2013 should have been used for averaging.

The first provision, Section 1.26, provides that the final average compensation is calculated based on income earned after 1994. Id. ¶ 37. It states, ECF 14-6 at 9:

1.26 "Final Average Compensation" shall mean a Participant's Compensation averaged over the five consecutive calendar years after 1994, out of the last 15 (or fewer) consecutive calendar years after 1994, whichever yield the highest average.

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If a Participant does not have five consecutive calendar years of Compensation after 1994, his Final Average Compensation shall be based on his actual years of Compensation after 1994.

In no event shall Compensation for any Plan Year beginning before 1994 be used in determining a Participant's Final Average Compensation.

Article V of the 2001 NBE Plan is titled "Calculation Of Benefits."² Section 5.7 is titled Transfers." It provides, in part, ECF 14-6 at 25:

(b) Change in Employment Status. The following rules shall apply to a Participant whose employment status changes so that he becomes, or ceases to be, an Employee within the meaning of Section 1.22:

(1) A participant who ceases to be an Employee but continues his employment with an Employer shall have his benefit calculated on the basis of his Years of Credited Service and his Final Average Compensation as of the date on which he ceases to be an Employee.

And, under Section 1.22, "Employee" is defined as "any employee of an Employer who (a) is not covered by a collective bargaining agreement, unless the collective bargaining agreement specifically provides for participation hereunder . . . ." ECF 14-6 at 8-9.

According to plaintiff, when faced with the seemingly...