Thornton v. Graphic Communications Conference

• Decision Date: 14 May 2009
• Docket Number: No. 08-5283.,08-5283.
• Citation: 566 F.3d 597
• Parties: Charles THORNTON, Plaintiff-Appellant, v. GRAPHIC COMMUNICATIONS CONFERENCE OF the INTERNATIONAL BROTHERHOOD OF TEAMSTERS SUPPLEMENTAL RETIREMENT AND DISABILITY FUND, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

566 F.3d 597

Charles THORNTON, Plaintiff-Appellant, v. GRAPHIC COMMUNICATIONS CONFERENCE OF the INTERNATIONAL BROTHERHOOD OF TEAMSTERS SUPPLEMENTAL RETIREMENT AND DISABILITY FUND, et al., Defendants-Appellees.

No. 08-5283.

United States Court of Appeals, Sixth Circuit.

Argued: March 6, 2009.

Decided and Filed: May 14, 2009.

ARGUED: William T. Payne, Stember, Feinstein, Doyle & Payne, Pittsburgh, Pennsylvania, for Appellant. Peter J. Leff, O'Donnell, Schwartz & Anderson, Washington, D.C., for Appellees. ON BRIEF: William T. Payne, Ellen Mary Doyle, Pamina Grace Ewing, Stember, Feinstein, Doyle & Payne, Pittsburgh, Pennsylvania, Michael D. Grabhorn, Grabhorn Law Office, Louisville, Kentucky, for Appellant. Peter J. Leff, O'Donnell, Schwartz & Anderson, Washington, D.C., for Appellees.

Before: KEITH, SUTTON, and GRIFFIN, Circuit Judges.

DAMON J. KEITH, Circuit Judge.

Plaintiff-Appellant Charles Thornton challenges on appeal the district court's award of summary judgment in favor of Defendant-Appellees Graphic Communications Conference of the International Brotherhood of Teamsters Supplemental Retirement and Disability Fund and its Board of Trustees regarding claims Thornton raised under the Employment Retirement Income Security Act of 1974 (ERISA). Thornton argues: (1) Defendants violated the ERISA anti-cutback rule by rescinding an increase of retirement benefits, which was introduced after he had retired; (2) the Board violated its fiduciary duty under ERISA by passing the amendment, which rescinded the increase; and (3) the district court abused its discretion in denying his Fed.R.Civ.P. 56(f) motion for discovery. For the following reasons, we AFFIRM the district court's decision to grant summary judgment in favor of Defendants on both substantive claims and AFFIRM its decision to deny Thornton's motion for discovery.

I.

Defendant-Appellee Graphic Communications Conference of the International Brotherhood of Teamsters Supplemental Retirement and Disability Fund ("the Plan") is a multi-employer benefits plan that provides retirement benefits to employees in the graphic communications industry. The Plan provides monthly retirement benefits to eligible plan participants based on a formula that factors in the given participant's number of years of service, the covered wages as defined by the terms of the applicable plan document, and the respective employer's contribution rate. The Plan's Board of Trustees ("Board"), also a Defendant-Appellee in this case, serves as the Plan's sponsor and administrator.

Plaintiff-Appellant Charles Thornton ("Thornton") is a participant in the Plan who worked under covered employment until he retired on February 1, 1995. He commenced receiving his retirement benefits under the Plan as calculated by Section 4.1(B) of the Plan Document in effect at the time of his retirement.¹ Less than two years after Thornton's retirement, the Board amended the Plan to provide a three percent increase in benefits for all active and retired participants effective as of February 1, 1997 ["1997 Benefits Increase"]. The Board again amended the Plan the following year to provide an additional four percent benefits increase, compounded, to all participants effective as of February 1, 1998 ["1998 Benefits Increase"]. In January of 1999, the Board amended the Plan for a third time following Thornton's retirement and increased all participants' benefits by an additional 9.4 percent, compounded, effective February 1, 1999 ["1999 Benefits Increase"].

On December 6, 2002, the Board adopted a benefits reduction proposal, effective April 1, 2003, to rescind the 1999 Benefits Increase for Plan participants, like Thornton, who retired from covered employment prior to February 1, 1999 ["December 2002 Amendment"]. The 1997 and 1998 Benefits Increases remained intact after the December 2002 Amendment and Thornton continues to receive lifetime monthly retirement benefits that reflect those increases. Defendants allege the amendment to rescind the 1999 Benefits Increase was passed in response to advice received from an actuarial consultant who claimed the Plan faced a significant funding shortfall, which, if not remedied, would jeopardize the Plan's long term financial viability.

On March 5, 2007, Thornton filed a class action suit in the Western District of Kentucky on behalf of himself and other similarly situated individuals who received Plan benefits prior to February 1, 1999 and experienced a reduction in those benefits as a result of the December 2002 Amendment. As succinctly stated by the district court:

Count One of Thornton's First Amended Class Action Complaint alleges that by rescinding the February 1, 1999 benefit increase provided to those employees who had retired prior to February 1 1999, the Plan and the Board of Trustees violated the anti-cutback rule set forth in ERISA § 204(g), 29 U.S.C. § 1054(g). Count Two alleges that the Board of Trustees, in taking such action, breached their fiduciary duty by failing to administer the Plan in accordance with ERISA § 404(a)(1)(D), 29 U.S.C. § 1104(a)(1)(D).

Thornton v. Graphic Comm. Conference of the Int'l Bhd. of Teamsters Supp. Ret. and Dev. Fund, No. 3:07-CV-118-S, 2008 WL 474416, at *1 (W.D.Ky. Feb. 19, 2008) (unpublished). In response to Thornton's complaint, Defendants filed a Fed.R.Civ.P. 12(b)(6) motion to dismiss, and in the alternative, a motion for summary judgment pursuant to Fed.R.Civ.P. 56 ("Rule 56"). Thornton filed an opposition to both of those motions and submitted a Rule 56(f) affidavit requesting more time to conduct discovery prior to the district court's ruling on Defendants' dispositive motions.

On February 19, 2008, the district court ruled that the December 2002 Amendment rescinding the 9.4 percent increase did not violate the ERISA anti-cutback rule because the Plan amendment granting the 1999 Benefits Increase was adopted after Thornton retired in 1995. Thornton, 2008 WL 474416, at *4. The court further ruled that discovery sought by Thornton pursuant to Rule 56(f), relating to documents surrounding the December 2002 Amendment and other post-retirement benefit increases, was unnecessary given that Defendants had already proffered the Plan Document in effect at the time of Thornton's retirement in 1995. Id. Finally, having held the rescission of the 9.4 percent increase was not in violation of ERISA, the court reasoned that the Board similarly did not breach its fiduciary duty in passing the amendment. Id. The district court granted Defendants' motion for summary judgment and dismissed Thornton's complaint. On February 26, 2008, Thornton timely appealed the district court's decision.

II.

We review a district court's award of summary judgment de novo. Sperle v. Mich. Dep't of Corr., 297 F.3d 483, 490 (6th Cir.2002). "Summary judgment is proper where no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law." Id. Our inquiry focuses on "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). When reviewing a grant of summary judgment, "[w]e must view the facts contained in the record and draw all inferences from the record in the light most favorable to the nonmoving party." McClain v. N.W. Cmty. Corr. Ctr. Judicial Corr. Bd., 440 F.3d 320, 327 (6th Cir.2006).

III.

Thornton argues on appeal that Defendants violated ERISA's anti-cutback rule by adopting an amendment to the Plan that eliminated the 1999 Benefits Increase for pre-February 1, 1999 retirees. The central mission of ERISA is to protect "employees' justified expectations of receiving the benefits their employers promise them." Central Laborers' Pension Fund v. Heinz, 541 U.S. 739, 743, 124 S.Ct. 2230, 159 L.Ed.2d 46 (2004). The anti-cutback rule serves a critical role in this enterprise by prohibiting pension plan amendments that decrease plan participants' "accrued benefits." ERISA, § 204(g), 29 U.S.C. § 1054(g) (2006); see also Central Laborers', 541 U.S. at 744 124 S.Ct. 2230.² The anti-cutback rule also appears in the Internal Revenue Code, pursuant to Title II of the ERISA statute, in materially identical form and disqualifies from tax-exempt status those pension plans that violate its conditions. I.R.C. § 411(d)(6); see also I.R.C. § 401(a) (defining a qualified pension plan under ERISA); I.R.C. § 411(a) (disqualifying from coverage under IRC § 401(a) those pension plans which do not provide that an employee's rights to normal retirement benefits be "nonforfeitable"); I.R.C. § 501(a) (granting tax-exempt status to qualified pension plans).³ The parallel ERISA and IRC provisions serve the same function, which is to safeguard the benefits an employee has been promised and earned over time by fulfillment of the Plan's conditions. See Central Laborers' 541 U.S. at 743, 746, 124 S.Ct. 2230.⁴

Because only an "accrued benefit" is protected by the anti-cutback rule, the scope of the rule directly depends on the meaning of "accrued benefit." In relevant part, the IRC defines an "accrued benefit" "in the case of a defined benefit plan, [as] the employee's accrued benefit determined under the plan and ... expressed in the form of an annual benefit commencing at normal retirement age." I.R.C. § 411(a)(7)(A)(i).⁵ Thus, the fundamental question on appeal is whether the Plan's 1999 Benefits Increase of 9.4 percent constituted an "accrued benefit" for pre-February 1, 1999 retiree plan participants such that its later rescission by the December 2002 Amendment violated the anti-cutback rule of IRC § 411(d)(6)(A). We hold that it does not.

A core issue confronting the Court is to what extent we must consider, and possibly defer to, Treasury interpretations of the statutory definition of "accrued benefit" and the...