Sandifer v. CENT. STATES SE & SW AREAS PENSION, Civ. A. No. 88-087.

• Decision Date: 30 March 1989
• Docket Number: Civ. A. No. 88-087.
• Citation: 709 F. Supp. 713
• Parties: Mary L. SANDIFER v. CENTRAL STATES SOUTHEAST AND SOUTHWEST AREAS PENSION FUND.
• Court: U.S. District Court — Eastern District of Louisiana

709 F. Supp. 713

Mary L. SANDIFER v. CENTRAL STATES SOUTHEAST AND SOUTHWEST AREAS PENSION FUND.

Civ. A. No. 88-087.

United States District Court, E.D. Louisiana.

March 30, 1989.

Joseph G. Albe, New Orleans, La., for plaintiff.

Sessions, Fishman, Rosenson, Boisfontaine, Nathan & Winn, J. David Forsyth, T.A., New Orleans, La., for Central States Southeast & Southwest Areas Pension Fund.

ORDER AND REASONS

FELDMAN, District Judge.

This case, before the Court on cross-motions for summary judgment, raises the question of whether a provision of defendant's Joint and Survivor Pension Benefit Plan violated ERISA, 29 U.S.C. § 1055(e), making the defendant liable for an arbitrary and capricious denial of pension benefits under 29 U.S.C. § 1132.

I. Factual Background

Plaintiff's deceased husband, Monroe L. Sandifer, was a member of Teamsters Local No. 270, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America. Mr. Sandifer was a participant in the Central States, Southeast and Southwest Area Pension Fund pursuant to the collective bargaining agreement between the Teamsters Local and McLean Trucking Company, Mr. Sandifer's employer. Mr. Sandifer died on August 18, 1978, at age 59, before retirement.

After Mr. Sandifer's death, the plaintiff applied for a Survivor Pension Benefit. The Fund approved her application for a Pre-Retirement Survivor Pension Benefit, and paid her $450.00 a month for sixty months (from September, 1978 until August, 1983, for a total of $27,000.00). Thereafter, the payments ceased.

From November, 1979 until October, 1983, Mrs. Sandifer corresponded with the Fund, asking if her pension benefits would continue for life. The Fund representatives advised her that she was ineligible for benefits after August, 1983 because Mr. Sandifer had not elected in writing the Pre-Retirement Joint and Survivor Pension Benefit as required by the Pension Plan.

After exhausting her administrative remedies, including a decision by Fund Trustees to deny plaintiff's appeal for future benefit payments, plaintiff brought suit under ERISA, 29 U.S.C. § 1132. Plaintiff contends: 1) that the Plan in effect at the time of her husband's death violated 29 U.S.C. § 1055(e); 2) that, whether or not the original plan violated ERISA, the amended Plan subsequently adopted by the Fund should apply retroactively; 3) that the Court should award attorney's fees for defendant's arbitrary and capricious denial of pension benefits; and 4) that she is entitled to damages for aggravated heart and high blood pressure conditions caused by defendant's wrongful denial of benefits.

Defendant counters that: 1) 29 U.S.C. § 1055(e) does not apply to this case; 2) that the subsequently adopted plan amendment does not retroactively confer benefits on plan participants; 3) that the decision of the Fund Trustees was not arbitrary and capricious; and 4) that plaintiff is not entitled to attorney's fees under 29 U.S.C. § 1132 or other damages.

II. Standard of Review of Fund Trustees Decision

The threshold issue facing this Court is what standard of review to apply to the Fund Trustees' decision denying plaintiff's appeal for lifetime benefit payments. Longstanding Fifth Circuit precedent consistently held that pension plan administrators' determinations regarding benefit eligibility were to be upheld unless arbitrary, capricious, or in bad faith. Pierre v. Connecticut General Life Insurance Co., 866 F.2d 141, 143 (5th Cir.1989); Denton v. First National Bank of Waco, 765 F.2d 1295 (5th Cir.1985), rehg. den. 772 F.2d 904 (5th Cir.1985); Offutt v. Prudential Insurance Co., 735 F.2d 948, 950 (5th Cir.1984); Bayles v. Central States, Southeast and Southwest Area Pension Fund, 602 F.2d 97, 100 n. 3 (5th Cir.1979).

However, recently the United States Supreme Court, in Firestone Tire and Rubber Co. v. Bruch, ___ U.S. ___, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989), held that the arbitrary and capricious standard of review is no longer the rule for Section 1132(a)(1)(B) challenges. In Firestone, the Court stated, "a denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Id. 109 S.Ct. at 956.

The Supreme Court said that in enacting ERISA, Congress intended to incorporate much of the fiduciary law contained in the Labor Management Relations Act. The LMRA provides for an arbitrary and capricious standard of review, but courts construing the statute have held that the arbitrary and capricious standard served primarily as a means of asserting jurisdiction over suits by beneficiaries of LMRA plans who were denied benefits by trustees. See, e.g., Van Boxel v. Journal Co. Employees' Pension Trust, 836 F.2d 1048, 1052 (7th Cir.1987). However, the Court explained, ERISA, unlike the LMRA, explicitly authorizes suits against fiduciaries and plan administrators to remedy breaches of fiduciary duty regarding benefit plans. Thus, the Supreme Court concluded, "the raison d'etre for the LMRA arbitrary and capricious standard — the need for a jurisdictional basis in suits against trustees — is not present in ERISA." Firestone 109 S.Ct. at 954. See also, Note, "Judicial Review of Fiduciary Claim Denials under ERISA: An Alternative to the Arbitrary and Capricious Test" 71 Cornell L.Rev. 986, 994 n. 40 (1986).

The Supreme Court did note that, in drafting ERISA, Congress codified and made applicable to ERISA fiduciaries "certain principles developed in the evolution of the law of trusts." Firestone at 954, citing H.R.Rep. No. 93-533, p. 11 (1973), U.S.Code Cong. & Admin.News 1974, pp. 4639, 4649. The Court further stated that under the law of trusts, a deferential standard of review is appropriate when a trustee exercises discretionary powers. Id.

Importantly, the Court, in dictum, cited Central States, Southeast & Southwest Areas Pension Fund v. Central Transport, Inc., 472 U.S. 559, 568, 105 S.Ct. 2833, 2839, 86 L.Ed.2d 447 (1985) to illustrate the proposition that deference is due the trustees of a benefit plan when the plan itself provides for discretionary authority:

The trustees' determination that the trust documents authorize their access to records here in dispute has significant weight, for the trust agreement explicitly provides that `any construction of the agreement's provisions adopted by the Trustees in good faith shall be binding upon the Union, Employees, and Employers.'

That same pension plan is at issue in this case. As the Supreme Court noted in Firestone, the Central States plan explicitly gives the Trustees discretionary authority to determine eligibility for benefits and to construe the terms of the plan. Article IV, Section 17 of the Trust Agreement, provides:

The Trustees, by majority action, shall have the power to construe the provisions of this Agreement and the terms and regulations of the Pension Plan; and any construction adopted by the Trustees in good faith shall be binding upon the Union, Employees, and Employers.

When the Trustees determined Mrs. Sandifer's pension benefit eligibility within the language of the plan requirements, they were exercising the discretionary authority specifically vested in them by the trust instrument. Firestone, therefore, teaches that the defendant here falls within the exception to de novo review of Section 1132(a)(1)(B) claims established by the Supreme Court in that case.

Although the Firestone Court did not specifically state how much deference was due the Trustees of a pension plan when the plan provides for discretionary authority, the Court referred to the highly regarded Restatement (2d) of Trusts § 187 (1959) which counsels that, "Where discretion is conferred upon the trustee with respect to the exercise of a power, its exercise is not subject to control by the court except to prevent an abuse by the trustee of his discretion." (cited by the Court 109 S.Ct. at 954). Thus, this Court understands that the Supreme Court intended for reviewing courts to use an abuse of discretion standard in evaluating the decisions of plan trustees where, as here, the decisions involved an exercise of discretionary authority vested by the plan in the trustees.

III. Reviewing the Trustees' Decision: Did "Plan A" Violate 29 U.S.C. § 1055(e)?

Article IV, § 5(a)-(b) of the pension plan in effect when Mr. Sandifer died (Plan A) provided:

A Joint and Survivor Pension Benefit (subject to the election and rejection provisions in "APPENDIX A" of this Plan) shall be payable to a Pensioner upon Retirement (commencing upon his 55th birthday), or to the surviving spouse of a Participant upon his death on or after his 55th birthday but before his Retirement, if the Participant was then eligible for immediate payment of a pension benefit in accordance with Article IV, § 2, 3, or 4. Upon death of a Pensioner receiving this pension benefit, 50% thereof becomes payable to his surviving spouse, subject to other provisions in this section. If payable, the Joint and Survivor Pension Benefit shall be paid in lieu of any other pension benefit available pursuant to this Plan.

Election by a Participant to receive or to reject a Joint and Survivor Pension Benefit shall be registered by him pursuant to procedures established by the Trustees from time to time. "APPENDIX A" attached to this Plan sets forth the election procedures effective commencing January 1, 1976. After a Participant reaches his Normal Retirement Date (as defined in Article I, § 10) and as long as he remains in Covered Employment (as defined in Article III, § 2), the Joint and Survivor Pension Benefit shall be payable upon the earlier of his death or Retirement if he was then eligible for payment of a pension benefit, unless he has elected in writing that such benefit will not be payable upon his death after Retirement.

Appendix A(2) of...