Moehle v. NL Industries, Inc.
| Decision Date | 30 September 1986 |
| Docket Number | No. 85-554C(1).,85-554C(1). |
| Citation | 646 F. Supp. 769 |
| Parties | Charles W. MOEHLE, et al., Plaintiffs, v. NL INDUSTRIES, INC., et al., Defendants. |
| Court | U.S. District Court — Eastern District of Missouri |
Francis H. Kennedy, St. Louis, Mo., for plaintiffs.
Stuart M. Gerson, David H. Larry, Washington, D.C., Glenn L. Moller, St. Louis, Mo., for defendants.
This matter is now before the Court on defendants' motion for summary judgment. Defendants base their motion on the undisputed historical facts and the allegedly unambiguous language of the 1976 Pension Plan and the Collective Bargaining Agreement. This Court finds that the 1976 Pension Plan and the Collective Bargaining Agreement are unambiguous and that there are no genuine issues of fact. Therefore, defendants' motion for summary judgment is granted on all of plaintiffs' claims.
This is an ERISA case involving the amount of pension benefits to which pension participants are entitled upon reaching age 60 when they were terminated with 30 or more years of service prior to age 60. Plaintiffs were members of Local No. 1744, Chemical Workers' Basic Union and were hourly employees of defendant NL Industries, Inc. NL Industries employed plaintiffs at its Titanium Pigment Plant in St. Louis, Missouri. Plaintiffs worked under a Collective Bargaining Agreement between NL Industries and plaintiffs' union, Local No. 1744. Plaintiffs were participants in the Pension Plan at issue: "NL INDUSTRIES, INC. MODEL RETIREMENT PLAN for Salaried Employees Covered by a Collective Bargaining Agreement and Hourly Employees in the United States (Plan 2), Effective as Restated as of January 1, 1976." ("1976 Pension Plan"). On September 19, 1979, NL Industries closed its St. Louis Titanium Pigment Plant and terminated plaintiffs' employment.
When NL Industries closed its plant and terminated plaintiffs in 1979, plaintiffs were fully vested under the 1976 Pension Plan, had been employed for at least 30 years prior to termination, and, except for plaintiff Lamar Stewart, were under age 60. Prior to reaching age 60, plaintiffs filed Moehle v. NL Industries, Inc., No. 82-1780C(5) (E.D.Mo. Mar. 18, 1983) and Werner v. NL Industries, Inc., No. 80-897C(3) (E.D.Mo. Apr. 16, 1982), both of which were dismissed as untimely. When certain plaintiffs reached age 60, they applied to the NL Industries, Inc., Pension and Employee Benefits Committee ("PEBCO") for unreduced "60/30 Retirement" benefits. PEBCO administratively denied those claims. PEBCO determined that plaintiffs were entitled to a normal retirement benefit actuarially reduced to reflect retirement at age 60 rather than age 65, the normal retirement age. The unreduced "60/30 Retirement" benefit is greater than the actuarially reduced normal retirement benefit.
Thereafter, plaintiffs filed this suit against NL Industries, Inc., later joining as defendants the Pension Plan, PEBCO and seven PEBCO members. In their complaint, plaintiffs contend that (1) under the 1976 Pension Plan plaintiffs are entitled to unreduced "60/30 Retirement" benefits and that defendants interpreted the 1976 Pension Plan erroneously; (2) the 1976 Pension Plan, as interpreted by defendants, violates ERISA; (3) if the 1976 Pension Plan does not entitle plaintiffs to unreduced "60/30 Retirement" benefits, then defendants violated the Collective Bargaining Agreement between NL Industries and Local No. 1744 by not including such an entitlement provision in the 1976 Pension Plan; and (4) defendants breached their fiduciary duties to plaintiffs by terminating plaintiffs in 1979 rather than continuing them in employment status.
A Pension Plan covering employees at NL Industries' St. Louis Titanium Pigment Plant has existed in some form since the 1940's. The Pension Plan effective from January 1, 1968 until December 31, 1976 ("1968 Pension Plan"), provided both for normal retirement at age 65, 1968 Pension Plan § 4.1, and for early retirement at age 60 with either 30 years of service, 1968 Pension Plan § 4.2(a)(i), or 20 years of service, 1968 Pension Plan § 4.2(a)(ii) .
Under normal circumstances, an employee retiring at age 65 was entitled to benefits commencing at age 65. The retirement income would be the greater of benefits based on pension contributions and of a minimum benefit based upon years of participation in the Pension Plan. ("Normal Retirement Benefits"). 1968 Pension Plan § 5.1. An employee retiring at age 60 with 30 years of service ("60/30 Retirement") was entitled to benefits based upon the period of plan participation up to age 60 with benefits commencing at age 60. 1968 Pension Plan § 5.2(a). An employee retiring at age 60 with 20 years of service ("60/20 Retirement") was entitled to elect either (1) benefits based upon the period of plan participation up to age 60, but commencing at age 65 1968 Pension Plan § 5.2(b), or (2) benefits based upon the period of plan participation up to age 60 commencing at age 60, but actuarially reduced to reflect commencement at age 60 rather than age 65. 1968 Pension Plan § 5.2(c).
An employee participant whose employment was terminated after he had attained age 45 and had completed five years of participation could elect either to receive a cash refund of his contributions or to receive a retirement benefit commencing at age 65 based upon his period of plan participation up to the date of termination. 1968 Pension Plan § 6.1(b).
In 1974, Congress enacted the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001, et. seq. Section 206(a) of ERISA, 29 U.S.C. § 1056(a), provides in pertinent part:
In the case of a plan which provides for the payment of an early retirement benefit, such plan shall provide that a participant who satisfied the service requirements for such early retirement benefit, but separated from the service (with any nonforfeitable right to an accrued benefit) before satisfying the age requirement for such early retirement benefit, is entitled upon satisfaction of such age requirement to receive a benefit not less than the benefit to which he would be entitled at the normal retirement age, actuarially reduced under regulations prescribed by the Secretary of the Treasury.
Section 1056(a) requires those Pension Plans which provide an early retirement benefit to offer to those plan participants: (1) who have a nonforfeitable right to an accrued benefit and (2) who have completed the service requirements for early retirement, but (3) who separate from service prior to reaching the age for early retirement, the following benefit: the option to receive an actuarially reduced normal retirement benefit when the plan participant reaches early retirement age.
The House Conference Report described § 1056(a) as follows:
If the plan permits an employee who has not separated from service to receive a subsidized early retirement benefit if he meets certain age and service requirements, the plan must also permit an employee who fulfills the service requirement, but separates from service before he meets the age requirement, to receive benefit payments, on an actuarially reduced basis, when the separated employee meets the age requirement.
House Conf.Report No. 93-1280, 93d Cong., 2d Sess. reprinted in 1974 U.S. Code Cong. & Ad.News 4639, 5038, 5062.
The purpose of § 1056(a) is to ensure that if a plan promises the right to receive accrued benefits at an early retirement age upon meeting the service requirement, then all participants, including terminated employees, who meet the service requirement are entitled to receive benefits at the early retirement age. However, these terminated employee participants are not entitled to unreduced early retirement benefits. Rather, § 1056(a) guarantees these terminated employee participants actuarially reduced normal retirement benefits. Under § 1056(a) terminated employee participants do not stand on equal footing with employee participants who retire from employment at the early retirement date. See Phillips v. Amoco Oil Co., 614 F.Supp. 694, 716 (N.D.Ala.1985); Petrella v. NL Industries, Inc., 529 F.Supp. 1357, 1369 (D.N.J.1982).
The 1968 NL Industries Pension Plan did provide for early retirement benefits ("60/30 Retirement" and "60/20 Retirement"). The plan provided for benefits commencing at age 65 for terminated employee participants based upon the length of their employment participation. 1968 Pension Plan § 6.1(b) . However, the plan did not provide for the benefit commencing at age 60 for terminated employee participants required by the 1974 enactment of § 206(a) of ERISA, 29 U.S.C. § 1056(a).
Thus, NL Industries needed to alter its Pension Plan in order to comply with ERISA.
On September 23, 1976, NL Industries, Inc. and Chemical Workers' Basic Union Local No. 1744 of St. Louis, Missouri, entered into a Collective Bargaining Agreement. The Agreement Article XVIII, RETIREMENT ANNUITY AND LIFE INSURANCE PLAN, provided for the following relevant changes to be made to the Pension Plan:
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