Rhoton v. Central States, Southeast and Southwest Areas Pension Fund, 82-5245

• Decision Date: 22 September 1983
• Docket Number: No. 82-5245,82-5245
• Citation: 717 F.2d 988
• Parties: 4 Employee Benefits Ca 2233 Bertie Mae RHOTON, Plaintiff-Appellant, v. CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 988

717 F.2d 988

4 Employee Benefits Ca 2233

Bertie Mae RHOTON, Plaintiff-Appellant, v. CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND Defendant-Appellee.

No. 82-5245.

United States Court of Appeals Sixth Circuit.

Sept. 22, 1983.

John S. McLellan, argued, Kingsport, Tenn., for plaintiff-appellant.

Cecil D. Branstetter [Lead Counsel], R. Jan Jennings, Timothy Costello, argued, Nashville, Tenn., for defendant-appellee.

Before KENNEDY and WELLFORD, Circuit Judges, and COHN, District Judge. ^*

WELLFORD, Circuit Judge.

Plaintiff-appellant appeals the decision of the United States District Court for the Eastern District of Tennessee denying her relief in an action for survivor's benefits against the defendant-appellee Pension Fund. Jurisdiction is founded upon the Employee Retirement and Income Security Act (ERISA), 29 USC Sec. 1132(a)(1)(B).

At issue is whether the denial of the benefits sought was arbitrary, capricious, or in bad faith. Van Gunten v. Central States, Southeast and Southwest Areas Pension Fund, 672 F.2d 586 (6th Cir.1982). Because the Fund trustees have given an implausible interpretation to the Plan which we find contrary to its written language as well as its Summary, ¹ we find the denial of benefits arbitrary and capricious and reverse.

I.

The facts are largely uncontested. Plaintiff's deceased husband, Roy Rhoton, became ill in early 1978 and applied for and received a total disability pension of $150 monthly from the Fund. ² His entitlement derived from his past twenty-three years continuous employment as a mechanic by Mason & Dixon Lines, Inc., and his membership in Truck Drivers Local No. 549 of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America (Teamsters) during that time. Apparently upon learning that he was terminally ill, on November 7, 1978, Rhoton also applied for an early retirement pension, which would have paid $348.58 to him for the remainder of his life. His years of service had vested him with the right to the early retirement pension.

Rhoton died on December 12, 1978, before the Fund had processed his application for early retirement, and his surviving spouse, plaintiff-appellant in this action, subsequently applied for survivor pension benefits. The application was denied both by Fund administrators and its trustees on the grounds that Rhoton had irrevocably chosen to receive disability benefits, and was thereby precluded from receiving early retirement benefits.

It is undisputed that unless Rhoton were precluded from his vested retirement benefits by reason of his earlier decision to take the lesser disability benefits, he would, and his widow also would, be entitled to receive those benefits. ³ The primary question in dispute, then, was whether or not Rhoton could legitimately effect a change in his benefits once he had elected to receive disability benefits from the Pension Plan. The district court upheld the trustees' determination that he could not. The court relied in part on the following language from the Summary of the plan and its benefits:

SELECTION OF BENEFITS

Only ONE type of pension benefit will be payable to you from this Plan. Even if you meet the requirements for more than one type of pension benefit, only ONE will be payable from this Plan at the time of your Retirement or death. Therefore, you MUST SELECT the type of benefit you may be eligible to receive. This selection MUST be made AT THE TIME YOU RETIRE AND APPLY FOR A PENSION BENEFIT.

Summary at 26.

The district court also relied on portions of the Summary which indicate that a pensioner who becomes re-employed after retirement must work at least an additional three years before becoming eligible to change benefit types. See Summary at 28. The district court concluded that the interpretation given to the Plan by its trustees was neither arbitrary nor capricious since it was "properly based upon reasonable financial and actuarial considerations which underlie the solvency of the entire trust." The court therefore denied appellant all relief.

II.

This appeal requires an examination of whether the contract language can support the interpretation given it by the trustees of the Plan and ratified by the district court. Our review of the language of the Plan and Summary persuades us that the trustees' interpretation is arbitrary and capricious. The language does not support the trustees' harsh interpretation; rather, common sense and fairness suggest clearly that the interpretation sought by appellant is the correct one.

In support of their argument that benefits were properly denied, trustees rely primarily upon sections of the Plan itself: Article IV, section 4.11 of the Plan, which provides that pensioners who are eligible for more than one type of benefit must select only one "in order to avoid payment of both benefits," and Article IV, section 4.14 of the Plan, which states that a pensioner (including a disability pensioner, see section 4.6) who becomes re-employed in a Teamster industry must complete at least 150 weeks of additional contributions in order to change the type of benefits he may receive.

The trustees rely on the "Selection of Benefits" provision of the Summary quoted by the district court. The clear purpose of that provision, however, is to avoid "double-dipping" by participants who are eligible for multiple benefits. The section of the Plan itself which corresponds to the above Summary description states as follows:

Section 4.11: Selection of Benefits. A selection shall in every appropriate instance be made between the Death Benefit (section 4.08) the Pre-Retirement Survivor Pension Benefit (section 4.09) and the Post-Retirement Survivor Pension Benefit (section 4.10) in order to avoid payment of both benefits.

(Emphasis added.)

Mr. Rhoton did not apply for both disability and early retirement benefits. Rather, he requested that he receive early retirement benefits in lieu of the disability benefits he was already receiving. No language, either in the Plan or Summary, suggests that he was not at liberty to effect such a change. In our view, this section of the Plan does not support the forfeiture which results from the trustees' interpretation.

The trustees also rely on section 4.14(c), entitled "Re-employment in the Teamster Industry," which provides as follows:

(c) If a Pensioner after Retirement has returned to Covered Employment and he retires again, the type of benefit received under Articles IV or V of this Plan shall be subject to change if at least 150 weeks of contributions (as defined in section 1.08) were made or required to be made to the Pension Fund on his behalf because of his return to Covered Employment and he satisfies all other eligibility requirements for that type of benefit.

The trustees' reliance on section 4.14 (the 150-week rule) is misplaced since Rhoton did not "return to covered employment." The section requires 150 weeks of contribution from pensioners who return to active Teamster employment after retirement; it does not by express language or by implication prohibit a participant in the Plan who is eligible for more than one type of benefit from altering his initial selection. When section 4.14(c) is read with other provisions in the Plan and Summary, it is clear that neither the Plan nor its Summary precludes selection of alternatively available benefits for eligible participants such as Rhoton. The provisions relied upon by appellee apply only to workers who elect to retire with eligibility for one type of benefit, later become re-employed, and as a consequence qualify for a new type of benefit not previously available to them. Those workers must accumulate 150 weeks of additional credits to attain the higher retirement benefits.

The language of the Summary mandates this interpretation. The Summary section, entitled "Re-Employment after You Start Receiving Benefits," reads as follows:

In the event you retire, start to receive benefits, and then return to Covered Employment ... your benefits under this Plan will be suspended.... When...