Langman v. Laub

• Decision Date: 06 May 2003
• Docket Number: Docket No. 02-7457.
• Citation: 328 F.3d 68
• Parties: Solomon LANGMAN, Plaintiff-Appellant, v. Emanuel LAUB, James Johnson, Mel Weitz, Harold Friedman, Jon Greenfield, Sam Pelz, Manuel Monaco, Hector Torres, and Sidney Blumgold, trustees of Local 338 Retirement Fund; Retail, Wholesale and Chain Store Food Employees Union Retirement Trust Board of Trustees, Administrator of Local 338 Retirement Fund; and Local 338 Retirement Fund, Defendants-Appellees.
• Court: U.S. Court of Appeals — Second Circuit

328 F.3d 68

Solomon LANGMAN, Plaintiff-Appellant, v. Emanuel LAUB, James Johnson, Mel Weitz, Harold Friedman, Jon Greenfield, Sam Pelz, Manuel Monaco, Hector Torres, and Sidney Blumgold, trustees of Local 338 Retirement Fund; Retail, Wholesale and Chain Store Food Employees Union Retirement Trust Board of Trustees, Administrator of Local 338 Retirement Fund; and Local 338 Retirement Fund, Defendants-Appellees.

Docket No. 02-7457.

United States Court of Appeals, Second Circuit.

Argued: January 17, 2003.

Decided: May 6, 2003.

Edgar Pauk, New York, N.Y. (Scott Riemer on brief), for Plaintiff-Appellant.

Eugene S. Friedman, Friedman & Wolf, New York, N.Y. (William K. Wolf and Erinn Weeks Waldner on brief), for Defendants-Appellees.

Before: VAN GRAAFEILAND and B.D. PARKER, Circuit Judges, and RAKOFF, District Judge.^*

RAKOFF, District Judge.

Plaintiff-appellant Solomon Langman appeals from a judgment of the United States District Court for the Southern District of New York (Miriam Goldman Cedarbaum, Judge), granting summary judgment to defendants-appellees. See Langman v. Laub, 97 Civ. 6063, 2002 WL 472033 (S.D.N.Y. Mar.28, 2002). Although our interpretation of the applicable law differs somewhat from that of the district court, we agree with its conclusion that plaintiff received all the pension benefits to which he was entitled. Accordingly, we affirm the judgment.

The pertinent facts are undisputed. For many years, Local 338 of the Retail, Wholesale and Chain Store Food Employees Union has maintained, in conjunction with various employers, a pension plan for its retired workers (the "Plan"). At numerous times, the Plan was amended so as to increase benefits, across-the-board, for all current employees. On four occasions, moreover, the Plan was more generally amended, specifically in 1976, 1981, 1984, and 1994. Since 1974, the Plan has been governed by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq.

From 1953 through 1973, Langman worked at Waldbaum's, Inc. in a position covered by the Plan, but in August 1973 he transferred to a non-covered position at Waldbaum's where he remained until he left Waldbaum's employ in June 1979. Four months later, in October 1979, Langman resumed covered employment with a different employer, and continued in this position until his retirement on May 1, 1996.

Pursuant to Amendment No. 8 to the 1994 Plan, an employee who, like Langman, claims early retirement on or after January 1, 1996 is entitled to receive a monthly pension equal to a benefit rate of $50 multiplied by the number of years of his service in covered employment. However, under Article V, § 7 of the 1994 Plan (the "1994 separation provision") the benefit rate for a claimant who previously "separated from employment" — i.e., who worked fewer than 500 hours in covered employment during an applicable 12-month period — is "pro rated," so that for the portion of his covered service that preceded the separation, he receives only the benefit rate in effect at the time of his separation.¹

Construing these provisions, defendants initially calculated plaintiff's monthly pension by applying the $50 benefit rate that was in effect at the time Langman retired only to the portion of his employment subsequent to his return to covered service in 1979, and applying to the earlier portion of his covered employment prior to his separation in 1973 the $5 benefit rate that was in effect at the time of his separation. However, after realizing that the pro rata formula for employees who had previously separated was not introduced into the Plan until 1984,² and that use of the $5 rate would therefore retroactively diminish Langman's benefit in violation of ERISA, defendants increased the benefit rate for the pre-separation period to $20, i.e., the benefit rate in effect when the separation provision was first introduced in 1984.

Despite this adjustment, Langman commenced this lawsuit, claiming that he was entitled to the $50 benefit rate for the entire period of his covered employment. By Opinion dated March 28, 2002, the district court denied plaintiff's motion for summary judgment in its entirety, and granted defendants' motion for summary judgment with respect to all claims. On appeal, Langman's primary argument is that defendants' calculation violated ERISA's 133-1/3 percent accrual test set forth in ERISA § 204(b)(1)(B), 29 U.S.C. § 1054(b)(1)(B), which provides that:

A defined benefit plan satisfies the requirements of this paragraph of a particular plan year if under the plan the accrued benefit payable at the normal retirement age is equal to the normal retirement benefit and the annual rate at which any individual who is or could be a participant can accrue the retirement benefits payable at normal retirement age under the plan for any later plan year is not more than 133 1/3 percent of the annual rate at which he can accrue benefits for any plan year beginning on or after such particular plan year and before such later plan year. For purposes of this subparagraph —

(i) any amendment to the plan which is in effect for the current year shall be treated as in effect for all other plan years; [and]

(ii) any change in an accrual rate which does not apply to any individual who is or could be a participant in the current year shall be disregarded[.]

Langman asserts that since the $50 benefit rate used to calculate his pension benefits for the later years is more than 133 1/3 percent of the benefit rate used to calculate his pension benefit for the earlier years, defendants' calculation — and, more generally, the separation provisions on which it is premised — violates the 133 1/3 percent test.

This argument, however, completely misapprehends the acknowledged purpose of the 133 1/3 percent test, which is to prevent the practice known as "backloading of benefits." Hoover v. Cumberland, Md. Area Teamsters Pension Fund, 756 F.2d 977, 982 n. 10 (3d Cir.1985). As explained in the House Report on ERISA:

The primary purpose of [minimum accrual rates] is to prevent attempts to defeat the objectives of the minimum vesting provisions by providing undue "backloading," i.e., by providing inordinately low rates of accrual in the employee's early years of service when he is most likely to leave the firm and by concentrating the accrual of benefits in the employee's later years of service when he is most likely to remain with the firm until retirement.

H.R.Rep. No. 93-807 (1974), reprinted in 1974 U.S.C.C.A.N. 4639, 4688. In other words, the test applies to how a given plan operates at a given time and prevents it from being unfairly weighted against shorter-term employees; but it is irrelevant to across-the-board increases in benefit rates made at some future time on behalf of all current employees regardless of period of service. Indeed, it would be a strange rule that would prohibit a fund from making more than a one-third increase in...