Tapley v. Locals 302 & 612 of the Int'l Union of Operating Eng'rs, 11–35220.

• Decision Date: 06 September 2013
• Docket Number: No. 11–35220.,11–35220.
• Citation: 728 F.3d 1134
• Court: U.S. Court of Appeals — Ninth Circuit
• Parties: James TAPLEY; Michael Chapman, Plaintiffs–Appellants, v. LOCALS 302 AND 612 OF THE INTERNATIONAL UNION OF OPERATING ENGINEERS–EMPLOYERS CONSTRUCTION INDUSTRY RETIREMENT PLAN, Defendant–Appellee.

728 F.3d 1134

James TAPLEY; Michael Chapman, Plaintiffs–Appellants,

v.LOCALS 302 AND 612 OF THE INTERNATIONAL UNION OF OPERATING ENGINEERS–EMPLOYERS CONSTRUCTION INDUSTRY RETIREMENT PLAN, Defendant–Appellee.

No. 11–35220.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Nov. 5, 2012.

Filed Sept. 6, 2013.

Michael Flanigan, Walther & Flanigan, Anchorage, AK, for Plaintiffs–Appellants.

Catherine A. Rothwell (argued) and Frank J. Morales, McKenzie Rothwell Barlow & Korpi, P.S., Seattle, WA, for Defendant–Appellee.

Appeal from the United States District Court for the District of Alaska, H. Russel Holland, Senior District Judge, Presiding. D.C. No. 3:10–cv–00033–HRH.

Before: WILLIAM A. FLETCHER and RAYMOND C. FISHER, Circuit Judges, and RAYMOND J. DEARIE, District Judge.^*

OPINION

DEARIE, Senior District Judge:

James Tapley and Michael Chapman appeal a judgment of the district court upholding the interpretation of plan language by the Trustees of their pension plan. The Trustees determined that appellants' respective post-retirement jobs as a traffic flagger and snow plow operator fell into the same “job classification” as their former union jobs as skilled mechanics. On that basis, each appellant was precluded from working his job if he wanted to collect retirement benefits. Tapley and Chapman brought suit against the Trustees under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., alleging that the Trustees' interpretation of plan language was an abuse of discretion. The district court affirmed the Trustees' decisions. We have jurisdiction under 28 U.S.C. § 1291, and we reverse.

I. Background

The relevant facts are largely undisputed. Appellants James Tapley (“Tapley”) and Michael Chapman (“Chapman”) spent the bulk of their careers working as skilled mechanics and members of the International Union of Operating Engineers (“the Union”) in Alaska. Tapley worked as a heavy duty mechanic, station mechanic, fabricator, and welder from approximately 1979 to 2001. Chapman worked as a service oiler, mechanic, fabricator, and welder from approximately 1984 to 2001. Their respective employers made contributions to Locals 302 and 612 of the International Union of Operating Engineers–Employers Construction Industry Retirement Plan (“the Plan”), a multi-employer, collectively bargained pension plan as defined by ERISA, 29 U.S.C. § 1002(37)(A).

The Plan permits participants to take early retirement if they have “attained age 52 and completed ten or more years of Credited Service.” The Plan also permits early and normal-age retirees to work while receiving retirement income as long as they “completely refrain from Post–Retirement Service of 51 or more hours during any calendar month.” ¹ Section 6.06 of the Plan defines “Post–Retirement Service” as all employment that is:

(a) within the geographic area covered by the Plan which for purposes of this Section shall consist of all of the State of Alaska and the State of Washington;

(b) in a job classification in which the Participant was employed while in Covered Employment, whether or not such employment is under the terms of a Collective Bargaining Agreement or written Contribution Agreement or in a supervisory capacity over such job classification; and

(c) in the industry in which the Individual Employers participate (any business activity of the type engaged in by the Individual Employers maintaining the Plan).

If a retiree works the proscribed number of hours in “Post–Retirement Service,” retirement benefits are temporarily suspended.

The Plan does not define the term “job classification” or otherwise clarify what would be suitable post-retirement employment. This obvious ambiguity in Plan language is the focus of this appeal. Tapley and Chapman each found jobs with the State of Alaska Department of Transportation (“DOT”) that they believed would allow them to continue working without sacrificing retirement income. But in both cases, the Trustees found that appellants' DOT jobs were in the same “job classification” as their union positions (hereinafter “Covered Employment”) and were therefore “Post–Retirement Service.”

A. James Tapley

Tapley applied to retire early, at age 52, after more than 20 years in Covered Employment as a heavy duty mechanic. At the time of his application for retirement in July 2007, he was working for the State of Alaska as a “light duty” mechanic—a transition to cars and trucks from his Covered Employment focus on heavy duty machinery. After an administrative hearing, the Trustees denied his request for early retirement benefits. As a result, Tapley abandoned mechanic work entirely and commenced early retirement on August 1, 2008.

A few months later, Tapley was offered a three-week temporary job with the State of Alaska as a “traffic flagger”—work he described as “holding a sign” and “directing traffic.” He sought a determination from the Trustees as to whether the flagger position was considered “Post–Retirement Service” under the Plan, but passed up the job when his request went unanswered for several weeks.

When another flagger opportunity arose in April 2009, Tapley accepted the position and began working for fewer than 51 hours per month while he awaited the Trustees' approval. In late April 2009, the Trust Administration Office informed him that the flagger job was also considered Post–Retirement Service because it is “in the Industry.” Once again, Tapley discontinued work and appealed the Trustees' decision.

The Trustees held a hearing on August 18, 2009. Tapley was represented in person, by counsel, and testified telephonically. Following the appeal, the Trustees issued a written decision explaining their finding that Tapley's DOT job is in the same “job classification” as his Covered Employment.

B. Michael Chapman

Chapman took a different approach to early retirement. Rather than pre-emptively requesting the Trustees' approval, he transitioned to his DOT job as a “snow plow operator” and worked for more than six years in that capacity before applying for early retirement benefits in December 2007, at age 52. The job description Chapman provided listed duties such as snow and ice removal; responsibility for highway safety equipment (e.g., signs, guardrails), drainage, and traffic control; clearing debris and brush; and patching potholes.

On February 13, 2008, the Trust Administration Office informed Chapman that the snow plow operator job was Post–Retirement Service. Chapman conceded that the jobs were in the same “geography”and “industry,” but appealed the Trustees' determination that the jobs were in the same “job classification.” The Trustees held a hearing on March 17, 2009, and issued a written decision on April 8, 2009, reaffirming their original determination.

C. The Trustees' Interpretation

Although Tapley's and Chapman's appeals were based on different underlying facts and decided separately, the Trustees employed essentially the same investigative and interpretive processes to reach the same outcome. Because the Plan did not define the term “job classification,” the Trustees acknowledged their “independent obligation to determine [its] meaning and application.” In both cases, the Trustees declined to “adopt a particular definition.” Instead, they offered two explanations for why Tapley's and Chapman's DOT jobs fell within the same “job classification” as their past Covered Employment.

The Trustees' first interpretation looked to the Master Labor Agreement, the Union employment contract. Although flagger and snow plow operator were not listed anywhere in the Agreement, the Trustees grouped appellants' DOT jobs and Covered Employment into the single generic class of “operating engineers,” a term borrowed from one of the five “Wage and Classification” groups in the Agreement. The district court readily rejected the approach as unreasonable, and the issue has been abandoned on appeal.

This appeal focuses on the Trustees' second interpretation, which the district court upheld as reasonable. There, the Trustees employed a “duties and skills” test comparing appellants' Covered Employment and post-retirement jobs. They reviewed submitted job descriptions and dispatch cards documenting daily assignments. They also took appellants' testimony. From this information, the Trustees identified similarities between the jobs in terms of duties, skills, and general competencies.

In Tapley's case, the Trustees looked to the State-provided “Request for Referral” form, which classifies his DOT position not as a “flagger,” but as an “Equipment Operator” “wage grade 58.” The enclosed job description included many duties beyond “flagging traffic”:

Grounds maintenance, brush cutting, flagging, raking, shoveling and general labor[.] Simple or routine maintenance with hand and power tools, drives 1 ton pick-up trucks[.] Sets up signs for traffic control and prepares the equipment for the crew.

The Trustees also requested clarification on the duty “prepares the equipment for the crew,” which they learned refers to pre-trip inspections involving checking oil, tires, and lights, and loading tar blocks, cones, signs, and stands.

Ultimately, the Trustees concluded that the duties and skills Tapley required as a flagger were similar or analogous to those required in his Covered Employment as a skilled mechanic. They observed that as a skilled mechanic, Tapley had duties and skills related to equipment operation—the broader career area to which the DOT assigned the flagger job. Specifically, they noted that as a mechanic and welder, Tapley sometimes operated equipment in order to move it into position for servicing, and drove a service truck to carry tools, parts, and lubricants. They also emphasized that Tapley was qualified to operate certain equipment, though he did so only once, on a failed dispatch to operate a backhoe. Likewise, when reviewing Tapley's flagger job, the Trustees looked for any...