Russo v. Health, Welfare & Pension Fund, Local 705, Intern. Broth. of Teamsters, 91-3794

• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)
• Citation: 984 F.2d 762
• Docket Number: No. 91-3794,91-3794
• Parties: 16 Employee Benefits Cas. 1412 Nick RUSSO, Plaintiff-Appellant, v. HEALTH, WELFARE & PENSION FUND, LOCAL 705, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, Defendant-Appellee.
• Decision Date: 12 January 1993

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984 F.2d 762 16 Employee Benefits Cas. 1412 Nick RUSSO, Plaintiff-Appellant,
v.
HEALTH, WELFARE & PENSION FUND, LOCAL 705, INTERNATIONAL
BROTHERHOOD OF TEAMSTERS, Defendant-Appellee. No. 91-3794. United States Court of Appeals,
Seventh Circuit. Argued Sept. 14, 1992.
Decided Jan. 12, 1993.

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Donald L. Bertelle (argued), Chicago, IL, for plaintiff-appellant.

Sherman Carmell (argued), Carmell, Charone, Widmer, Mathews & Moss, Chicago, IL, for defendant-appellee.

Before CUDAHY, RIPPLE and KANNE, Circuit Judges.

KANNE, Circuit Judge.

This case involves a dispute over retirement benefits. The plaintiff, Nick Russo, was a Teamster who had participated in the Union Local 705 Pension Fund ("the Fund") from its inception. In October 1981, a back injury disabled Mr. Russo and he has never been able to work again. Mr. Russo has received disability benefits from the Fund since 1983; however, this dispute arose because the Fund refused to increase his benefit level pursuant to his 1988 request.

A brief description of the Fund and its governing documents is necessary in order to address the issues raised by Mr. Russo's complaint. When Mr. Russo initially applied for pension benefits, two documents governed the Fund: the Second Amended Trust Agreement ("the Trust Agreement") and the 1976 Plan ("the Plan"). The Plan provided four types of pension benefits: normal retirement, early retirement, disability retirement, and deferred vested retirement. Each retirement level had specific service requirements, and all but disability retirement had an age requirement. ¹

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Normal retirement paid the highest amount of benefits, followed by early retirement, disability retirement and deferred vested retirement. The Fund's Trust Agreement gave the Trustees discretion to construe the terms of the Plan and make binding benefits decisions.

According to Mr. Russo, in early 1982 he went to see Lewis Peick, the Administrator of the Fund at that time, to inquire about his pension benefit options. Allegedly Mr. Peick told Mr. Russo, "You come back and show me them papers from the government that you got social security and I'll give you your disability. And when you become of age, I'll put you on your pension." In April 1983, Mr. Russo was awarded Social Security disability benefits by an administrative law judge. Mr. Russo immediately took his disability check to Mr. Peick and shortly thereafter began to receive disability pension benefits from the Fund.

Presumably in 1983, Mr. Russo and Mr. Peick agreed that Mr. Russo was not eligible for early retirement because although he met the service requirement, he did not meet the age requirement. At the time he was disabled, Mr. Russo had over twenty years of vesting service, but was only 54 years old. Hence, Mr. Russo accepted the disability pension benefits without complaint. However, the problem was that Mr. Peick left Mr. Russo with the impression that when Mr. Russo reached age 57 he would begin to receive the higher benefit amount pursuant to the early retirement provision of the Plan.

In 1988, after he had reached age 57, Mr. Russo asked Frank Abbate, the current pension analyst, to convert his disability pension to an early retirement pension pursuant to Section 4.2 of the Plan. When Mr. Russo's request was denied, he retained an attorney who wrote to the Fund requesting an explanation for the adverse decision. In a letter dated August 31, 1989, the current administrator of the Fund, Daniel Ligurotis, explained the Fund's position as follows:

Section 4.2 of the 1976 Plan expressly states that the employee "shall be eligible for an Early Pension" if, at the date of retirement, he/she has attained both age 57 and at least twenty years of vesting service. Thus, Mr. Russo could not have become eligible for an early retirement pension where he attained age 57 after retirement and while retired. (emphasis added ) ²

On September 18, 1989, Mr. Russo appealed to the Board of Trustees, arguing that he had not "retired" when he went on disability, but merely left covered employment because he was disabled. Mr. Russo also told the Board of Mr. Peick's earlier "promise" to convert him to early retirement benefits. The Trustees upheld the administrator's determination, reasoning that "retirement" in the Plan included employees, like Mr. Russo, who left employment because of disability. The Trustees' decision was partially based on the fact that the Plan referred to pension paid for disability as "Disability Retirement." Sections 2.3(e) & 4.3. Thus, since Mr. Russo was not 57 when he "retired," he was not eligible for early retirement benefits.

Following the Trustees' decision, Mr. Russo filed a complaint in federal district court asserting an ERISA claim. After discovery, the Fund moved for summary judgment. In response, Mr. Russo filed an amended complaint restating his ERISA claim and adding pendent state law claims of estoppel, breach of duty and misrepresentation. The Fund renewed its motion for summary judgment. The district court granted the motion with respect to the ERISA claim and dismissed the state law claims as preempted by ERISA. In granting the defendant's summary judgment motion, the district court held that the Trustees'

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decision was not arbitrary or capricious, and that since Mr. Russo had not suffered a detriment, the Trustees were not estopped from denying him increased benefits. In this timely appeal, Mr. Russo argues that the district court erred in both holdings. We disagree and affirm.

I.

We review a grant of summary judgment de novo. Rizzo v. Caterpillar, Inc., 914 F.2d 1003, 1006 (7th Cir.1990). "We apply the same standard as the district court and will affirm the summary judgment only if there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law." Edwards v. Massachusetts Mutual Life Ins. Co., 936 F.2d 289, 291 (7th Cir.1991). Moreover, we view the record in the light most favorable to the party opposing the motion. Rizzo, 914 F.2d at 1006.

When Trustees have discretion to construe pension plan terms and allocate benefits, judicial review is limited to whether their decision was arbitrary and capricious. Saracco v. Local Union 786 Building Material Pension Fund, 942 F.2d 1213, 1214 (7th Cir.1991); Rizzo, 914 F.2d at 1008. In other words, as long as the Trustees' decision was based on a reasonable interpretation of the plan's language and the evidence in the case, we will not disturb it. Saracco, 942 F.2d at 1215; Exbom v. Central States, Southeast & Southwest Areas Health & Welfare Fund, 900 F.2d 1138, 1143 (7th Cir.1990). Because the Fund's Trust Agreement clearly gave the Trustees discretion to construe the terms of the Plan and make final benefit decisions, ³ Mr. Russo can only prevail if the Trustees' refusal to convert his disability pension to an early retirement pension was arbitrary and capricious.

Even reading the record in a light most favorable to Mr. Russo, we cannot conclude that the Trustees' decision was arbitrary and capricious. We agree with the district judge's assessment:

And here it is clear that [the] challenged interpretation is reasonable. The Plan language may reasonably be read to require that "retirement on or after his 57th birthday" occur as a precondition to an early pension. This is particularly so because the Plan specifically provides deferred vested retirement for one who retires before age 57.

Russo v. Health, Welfare & Pension Fund, 777 F.Supp. 1429, 1430 (N.D.Ill.1991) (citation omitted). See Apponi v. Sunshine Biscuits, Inc., 809 F.2d 1210 (6th Cir.), cert. denied, 484 U.S. 820, 108 S.Ct. 77, 98 L.Ed.2d 40 (1987) (holding that an analogous interpretation of a comparable pension plan provision was not arbitrary or capricious). In addition to reasonably interpreting the Plan's language, the Trustees also considered relevant factual information including Mr. Peick's alleged misrepresentation and the fact that no other employee had ever converted from a disability pension to an early retirement pension.

Mr. Russo does not argue that the Trustees' reading of Section 4.2 was unreasonable. Nor does Mr. Russo argue that irregular procedures tainted the decision making process. Instead, Mr. Russo makes three different arguments. First, he argues that the Trustees' action was arbitrary because it reversed Mr. Peick's earlier "interpretation" of the Plan allowing him to convert, which Mr. Russo insists was also a reasonable reading of section 4.2. The flaw with Mr. Russo's argument is that Mr. Peick did not truly "interpret" the plan. Allegedly Mr. Peick said, "when

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you become of age, I'll put you on your pension." If anything, Mr. Peick's statement was a promise to interpret the plan a certain way once Mr. Russo reached age 57. An "interpretation" of the plan would necessarily involve a benefit determination. Mr. Peick never converted Mr. Russo's disability pension into an early retirement pension....