SHIELDS v. Int'l Brotherhood Pension Plan, 98-2627

• Decision Date: 24 August 1999
• Docket Number: No. 98-2627,98-2627
• Citation: 188 F.3d 895
• Parties: (7th Cir. 1999) TERRENCE F. SHIELDS, individually and on behalf of all others similarly situated, Plaintiff-Appellant, v. LOCAL 705, INTERNATIONAL BROTHERHOOD OF TEAMSTERS PENSION PLAN, BARBARA R. REYNOLDS, DANIEL C. LIGUROTIS, et al., Defendants-Appellees
• Court: U.S. Court of Appeals — Seventh Circuit

Page 895

188 F.3d 895 (7th Cir. 1999)

TERRENCE F. SHIELDS, individually and on behalf of all others similarly situated, Plaintiff-Appellant, v. LOCAL 705, INTERNATIONAL BROTHERHOOD OF TEAMSTERS PENSION PLAN, BARBARA R. REYNOLDS, DANIEL C. LIGUROTIS, et al., Defendants-Appellees.

No. 98-2627

United States Court of Appeals, Seventh Circuit

Argued January 22, 1999

Decided August 24, 1999

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 96 C 1928--William T. Hart, Judge. [Copyrighted Material Omitted] Before POSNER, Chief Judge, and FLAUM and RIPPLE, Circuit Judges.

RIPPLE, Circuit Judge.

Terrence Shields brought this action against Local 705, International Brotherhood of Teamsters Pension Plan ("the Local 705 Pension Plan" or "the Plan") and various individuals who have served as administrators or trustees of the Plan. In the claims relevant to this appeal, he alleged 1) that he is entitled to promissory estoppel under the federal common law to enforce a promise by Local 705 that his service with his previous employer would count toward his pension benefits; 2) that the deduction of health insurance premiums from his monthly pension check violates ERISA's anti- assignment, anti-alienation provisions; and 3) that the defendants' failure to provide him certain plan documents violated ERISA. Mr. Shields now seeks review of the district court's grant of summary judgment to the defendants on the first two claims and its dismissal of the third claim. He also appeals the district court's denial of his motion to strike certain documents related to the promissory estoppel claim.¹ For the reasons set forth in the following opinion, we affirm the judgment of the district court.

I BACKGROUND

A. Facts

From October 1962 until April 1967, Terrence Shields worked for Truck Rail Terminals ("TRT") and was a member of the Chicago Truck Drivers Union. In April 1967, TRT merged with Lasham Cartage, whose drivers belonged to Local 705, International Brotherhood of Teamsters ("Local 705"). Before the merger, the Secretary-Treasurer of Local 705 told the TRT drivers that, for purposes of health, welfare and pension benefits, they would be given credit for their time with TRT if their service with TRT and Lasham Cartage was continuous. He also sent them a letter, dated March 31, 1967, to the same effect. Mr. Shields and 35 other TRT drivers joined Local 705 and started to work for Lasham Cartage.

In the summer of 1967, Mr. Shields complained to the National Labor Relations Board ("NLRB") about his loss of seniority due to the merger. He contended that Local 705 should have inserted him into the seniority roster with the Lasham Cartage drivers according to the amount of time he had worked at TRT rather than placing him behind the Lasham Cartage drivers. Mr. Shields claims that the NLRB's decision rejecting his seniority claim relied on the fact that he was to receive health, welfare, and pension credit for his time with TRT prior to the merger.

In 1986, the Local 705 Pension Plan introduced a "30 years and out pension," also called the "30-Year Service Pension." Eligibility for this pension requires 30 years of "future benefit service," which is defined as employment with a "contributing employer"--an employer that contributes to the pension fund. Mr. Shields believes that he became eligible for this pension in October 1992 (30 years after he began at TRT). He contemplated retiring in November 1992 but was informed that he would be eligible only for the "25 years and out pension" or the "30 year reciprocal pension" rather than the more valuable "30 years and out pension." Because TRT was not a contributing employer, he was told, his 4.5 years of service with TRT was not "future benefit service" but instead was only "past benefit service," which counts only toward the "reciprocal pension." As a result, he qualified only for the "25 years and out" pension or the "30 year reciprocal" pension.

In ill health, Mr. Shields retired in January 1994. He began receiving benefits under the "30 year reciprocal pension" on February 1, 1994. Mr. Shields also receives medical coverage under the Local 705 Health and Welfare Plan ("Health Plan"). Health Plan premiums are automatically deducted each month from the plaintiff's pension payment.

B. Holding of the District Court

1.

The district court granted summary judgment for the defendants on Mr. Shields' claim that the deduction for Health Plan premiums from his monthly pension check violates the anti- assignment, anti-alienation provisions of sec. 206(d) of ERISA and that this violation constitutes a breach of fiduciary duty under sec. 404 of ERISA (29 U.S.C. sec. 1104). The district court determined that, under Treasury regulation 26 C.F.R. sec. 1.401(a)-13(e)(1), the deduction arrangement does not constitute an "assignment or alienation" because it is revocable at any time by the participant and the Health Plan has acknowledged in writing that it has no enforceable right to the pension benefits. The court then concluded that, although the defendants had not complied with the requirement that the written acknowledgment be filed within 90 days of the commencement of the arrangement, the defendants were now in compliance, and Mr. Shields was entitled to no further relief because he had not shown any harm from his participation in the deduction arrangement. In sum, the court held, all Mr. Shields sought was to bring the Plan into compliance with the regulations, and his grievance has been remedied.

The district court also denied Mr. Shields' motion to strike the two documents used by the defendants to prove compliance. Noting that the documents came into existence only after the close of discovery, the court held that granting the motion would force the court to proceed to trial in a situation in which the grievance has already been remedied.

2.

The district court also granted summary judgment for the defendants on Mr. Shields' promissory estoppel claim under federal common law to enforce Local 705's promise that TRT drivers would receive full credit toward their pension benefits for their years of service with TRT. The court held that, although this court has not resolved whether promissory estoppel may be recognized in cases involving multi-employer funded pension plans, the teaching of Black v. TIC Investment Corp., 900 F.2d 112 (7th Cir. 1990), and Russo v. Health, Welfare & Pension Fund, 984 F.2d 762 (7th Cir. 1993), is that promissory estoppel claims should not be recognized when they threaten the actuarial soundness of a plan. In this case, the district court held, requiring the Local 705 Pension Plan- -a multi-employer funded plan--to make payments outside of those required by its strict terms would hurt others associated with the Plan and threaten the Plan's actuarial soundness. The court thus granted summary judgment to the defendants and denied as moot Mr. Shields' motion to strike two documents related to this claim.

II DISCUSSION

A. Promissory Estoppel

We first address the plaintiff's federal common law claim for promissory estoppel against the Local 705 Pension Plan. Mr. Shields alleges that, in March 1967, the Secretary-Treasurer of Local 705 told the TRT drivers that they would be "given credit" for their years of service with TRT (for purposes of health, welfare and pension benefits from Local 705) if their service with TRT and Lasham Cartage was continuous.² Mr. Shields contends that these representations meant that his years of service would be counted as if he had always been a member of Local 705. Accordingly, he submits, when he retired in January 1994, he should have been credited with over 31 years of service (4.5 years at TRT and almost 27 years at Lasham Cartage), thus qualifying him for the "30 years and out" pension, rather than the less valuable "25 years and out" or "30 year reciprocal" pensions.

1.

We note at the outset that the Plan at issue in this case is a multi-employer, funded pension plan governed by ERISA. The courts of appeals have not resolved fully the extent to which estoppel claims can be recognized against ERISA plans. At least one circuit has adopted a bright- line rule forbidding promissory estoppel claims against an employee benefit plan governed by ERISA. See Miller v. Coastal Corp., 978 F.2d 622, 625 (10th Cir. 1992), cert. denied, 507 U.S. 987 (1993); cf. Nachwalter v. Christie, 805 F.2d 956, 957 (11th Cir. 1986) (holding that estoppel cannot be used to modify the written terms of an ERISA plan). In determining whether to allow the estoppel claim to go forward, several other courts have focused on the adverse effects that estoppel would have on a plan's actuarial soundness. See, e.g., Armistead v. Vernitron Corp., 944 F.2d 1287, 1300 (6th Cir. 1991); Chambless v. Masters, Mates & Pilots Pension Plan, 772 F.2d 1032, 1041 (2d Cir. 1985), cert. denied, 475 U.S. 1012 (1986); Rosen v. Hotel & Restaurant Employees & Bartenders Union, 637 F.2d 592, 598 & n.9 (3d Cir.), cert. denied, 454 U.S. 898 (1981).

Cases from our own circuit also demonstrate an awareness that concerns of actuarial soundness present special obstacles to the application of estoppel principles to an ERISA plan. See, e.g., Swaback v. American Info. Techs. Corp., 103 F.3d 535, 542 n.17 (7th Cir. 1996); Krawczyk v. Harnischfeger Corp., 41 F.3d 276, 280 (7th Cir. 1994); Russo v. Health, Welfare & Pension Fund, Local 705 Int'l Bhd. of Teamsters, 984 F.2d 762, 767 n.4 (7th Cir. 1993); Black v. TIC Inv. Corp., 900 F.2d 112, 115 (7th Cir. 1990). In light of this concern, we have so far recognized only a limited application of estoppel principles in the ERISA context. In Black v. TIC Investment Corp., we permitted an estoppel claim against a single- employer, unfunded welfare benefit plan, explicitly resting our decision on a finding that estoppel recovery would pose no threat to the plan's actuarial soundness because an...