Schleben v. Carpenters Pension Trust Fund—detroit & Vicinity

• Decision Date: 15 September 2014
• Docket Number: Case No. 14-cv-11564
• Parties: ROGER SCHLEBEN, Plaintiff, v. CARPENTERS PENSION TRUST FUND—DETROIT AND VICINITY, and TRUSTEES OF CARPENTERS PENSION TRUST FUND—DETROIT AND VICINITY, Defendants.
• Court: U.S. District Court — Eastern District of Michigan

ROGER SCHLEBEN, Plaintiff, v. CARPENTERS PENSION TRUST FUND—DETROIT AND VICINITY,and TRUSTEES OF CARPENTERS PENSION TRUST FUND—DETROITAND VICINITY, Defendants.

Case No. 14-cv-11564

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

September 15, 2014

Honorable Laurie J. Michelson

Magistrate Judge Mona K. Majzoub

OPINION AND ORDER DENYING DEFENDANTS' MOTION TO DISMISS [7]

In 2009, Roger Schleben began receiving disability benefits from the Carpenters Pension Trust Fund—Detroit and Vicinity, a multiemployer pension plan ("the Plan") that is subject to the Employee Retirement Income Security Act ("ERISA"). In 2013, the Plan's Trustees amended the Plan to address its underfunded status. The amendment significantly reduced Schleben's monthly disability payments. After denial of his administrative appeal of the reduction in benefits, Schleben filed this action. Defendants filed a Motion to Dismiss the Complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim on which relief can be granted. (Dkt. 7.) The Court reviewed the briefs and heard oral arguments on September 9, 2014.

The Court finds that Schleben has plausibly stated a claim under ERISA § 502(a)(3)(A) to enjoin Defendants from giving effect to an amendment that violates the following Plan provision: "[u]nless required by law, no amendment of this Plan shall be permitted to reduce the Accrued Benefit of any Participant or the benefits of any person who is already receivingbenefits on the date the benefit amendment is effective." Defendants' Motion to Dismiss the Complaint (Dkt. 7) is DENIED.

I. MOTION TO DISMISS STANDARD

The Federal Rules of Civil Procedure require that pleadings contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Plaintiff "must allege 'enough facts to state a claim of relief that is plausible on its face.'" Traverse Bay Area Int. Sch. Dist. v. Mich. Dep't of Educ., 615 F.3d 622, 627 (6th Cir. 2010) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Facial plausibility means that "the complaint has to 'plead[] factual content that allows the court to draw the reasonable inference that the defendant[s are] liable for the misconduct alleged.'" Ohio Police & Fire Pension Fund v. Std. & Poor's Fin. Servs., LLC, 700 F.3d 829, 835 (6th Cir. 2012) (alteration in original) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). "This standard does not require detailed factual allegations, but a complaint containing a statement of facts that merely creates a suspicion of a legally cognizable right of action is insufficient." HDC, LLC v. City of Ann Arbor, 675 F.3d 608, 614 (6th Cir. 2012) (citation and internal quotation marks omitted).

In construing the complaint, the court must "accept all well-pleaded factual allegations as true and construe the complaint in the light most favorable to plaintiffs." Bennet v. MIS Corp., 607 F.3d 1076, 1091 (6th Cir. 2010). The court "need not, however, accept unwarranted factual inferences." Id. (citing Twombly, 550 U.S. at 570). Nor are "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements" entitled to an assumption of truth. Iqbal, 556 U.S. at 678. "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not'show[n]'—'that the pleader is entitled to relief.'" Iqbal, 556 U.S. at 679 (quoting Fed. R. Civ. P. 8(a)(2)).

II. ALLEGATIONS OF THE COMPLAINT

The following allegations of the Complaint are assumed true for the purpose of deciding the Motion to Dismiss.

Schleben became disabled on April 4, 2008. (Dkt. 1, Compl. ¶ 6.) The Plan determined that Schleben met the requirements for disability benefits and awarded a disability retirement pension of $2,933.46 per month payable beginning on April 1, 2009. (Compl. ¶ 8.) At the time, the Plan provided: "Unless terminated for a reason set out in Section 5.4, the disability retirement benefit shall be payable during continued disability until the Active Participant has reached his 62nd birthday . . . ." (Compl. ¶ 10; see also Dkt. 7-6, Plan § 5.5.)¹ Schleben did not turn sixty-two or recover from his disability. (Compl. ¶ 11.) Section 5.4 provided that disability benefits could be automatically terminated if the Active Participant engages in employment in his or her trade or the Trustees determine that he or she is able to do so, or if the Active Participant fails to provide evidence of continuing disability or income when requested by the Trustees. (See Compl. ¶ 12; Plan § 5.4.) None of these applied in Schleben's case. (Compl. ¶ 13.)

Section 10.4 of the Plan provided that the Trustees could amend the Plan by majority vote but "[u]nless required by law, no amendment of this Plan shall be permitted to reduce the Accrued Benefit of any Participant or the benefits of any person who is already receiving benefits on the date the benefit amendment is effective." (Compl. ¶ 14; Plan § 10.4.)² EffectiveAugust 1, 2013, the Trustees adopted an amendment that reduced the amount of Schleben's benefits from $2,933.46 per month to $625.00 per month. (Compl. ¶ 16.) The Plan sent Schleben a notice that asserted the amendment was authorized by the Pension Protection Act of 2006 ("PPA"). (See Compl. ¶ 17.)

Schleben submitted an administrative appeal of the reduction to his benefits. (Compl. ¶ 20.) The Plan denied his appeal, stating: "The changes made to disability benefits in the All Reasonable Measures Plan do not violate Section 10.4 of the Plan document, the SPD, PPA, or ERISA as they do not affect accrued benefits and are not vested pension benefits. Fiduciary duties do not attach to the changes made as they are settlor acts." (Compl. ¶ 21.)

Schleben filed this action in April 2014, alleging two counts. The first count is against the Trustees for violation of ERISA § 404(a)(1)(D), which mandates that a pension plan be administered in accordance with its governing documents. (See Compl. ¶ 29.) Count I alleges that the Trustees did not act in accordance with § 10.4 of the Plan when they adopted an amendment that reduced Schleben's disability benefits although his benefits were in pay status on the effective date of the amendment. (Compl. ¶¶ 23-24.) Schleben requests that the Court enjoin the Trustees from giving effect to the amendment and order them to "make him whole for his losses since reduction of his disability retirement benefits on August 1, 2013, including the amount of his reduction, interest upon that amount, court costs, and attorney fees." (Compl. Count I, Prayer for Relief.) Count II is a claim against the Plan for an award of benefits under the Plan as it was before the amendment, with interest, costs, and attorney fees. (Compl. Count II, Prayer for Relief.)

III.ANALYSIS

Defendants argue that Schleben's complaint fails to state a claim against them for reduction of his disability benefits because "the benefits at issue are ancillary welfare-style benefits that can be reduced or even eliminated at any time by the Trustees," and "[t]he changes also did not violate the cited provision of the Plan document [§ 10.4] . . . as the Trustees did not reduce accrued benefits or any pension benefits in pay status." (Dkt. 7, Mot. at 6.) Before reaching these arguments, the Court must determine the standard of review to be applied, which requires the Court to determine the nature of Schleben's claims. As discussed below, the Court finds that Schleben's primary claim is brought under ERISA § 502(a)(3)(A) to enjoin an act that violates the terms of the plan, and that a de novo standard applies to that claim.

A. ERISA Standard of Review

In actions under ERISA, a de novo standard of review applies to decisions by benefit plan administrators unless "discretion has been expressly granted in the plan for the specific decision at issue." Shy v. Navistar Int'l Corp., 701 F.3d 523, 529 (6th Cir. 2012). Defendants argue that a deferential standard of review applies to the Trustees' decisions here "[b]ecause the Plan gives the Board authority to interpret the terms of the Plan and make benefits determinations." (Mot. at 7.) In fact, the Plan states: "The Trustees shall have discretionary authority to make any determination concerning eligibility for participation and benefits hereunder, including the interpretation of the Plan, Trust, or any other relevant document used in the administration of the Trust Fund." (Plan § 8.13 (emphasis added).)

The Sixth Circuit has explained that "discretion is not an all-or-nothing proposition. A plan can give an administrator discretion with respect to some decisions, but not others. A fiduciary or administrator does not have discretion with respect to all aspects of a plan simplybecause the administrator has discretion to interpret some provisions." Anderson v. Great W. Life Assur. Co., 942 F.2d 392, 395 (6th Cir. 1991) (emphasis in original); see also Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 111 (1989) (relying on principles of trust law to hold that a de novo standard of review applies to benefit determinations under ERISA unless the plan confers discretion, and noting that discretion "depends upon the terms of the trust." (internal quotation marks and citation omitted)); Shy, 701 F.3d 523, 530 (6th Cir. 2012) (holding de novo standard applied where plan gave administrator authority "to construe and interpret" the plan and "decide all questions of eligibility" but did not say the authority was discretionary and made it subject to review by a committee). The administrator "has exactly the amount and type of discretion granted by the plan, no more, and no less." Anderson, 942 F.2d at 395. In this case, the discretion afforded by the Plan extends only to "determination[s] concerning eligibility for participation and benefits."

To determine whether this discretionary authority...