Van Gunten v. Central States, Southeast and Southwest Areas Pension Fund, 80-3597

• Citation: 672 F.2d 586
• Decision Date: 19 March 1982
• Docket Number: No. 80-3597,80-3597
• Parties: 3 Employee Benefits Ca 1191 Claude I. VAN GUNTEN, Plaintiff-Appellant, v. CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

Page 586

672 F.2d 586

3 Employee Benefits Ca 1191

Claude I. VAN GUNTEN, Plaintiff-Appellant, v. CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND,

Defendant-Appellee.

No. 80-3597.

United States Court of Appeals, Sixth Circuit.

Argued Dec. 8, 1981.

Decided March 19, 1982.

Gregory L. Van Gunten, Swanton, Ohio, for plaintiff-appellant.

Bernard S. Goldfarb, Goldfarb & Reznick, Mark V. Webber, Cleveland, Ohio, Alan Levy, Goldberg, Previant & Uelmen, Milwaukee, Wis., for defendant-appellee.

Before MERRITT and KENNEDY, Circuit Judges, and PHILLIPS, Senior Circuit Judge.

PER CURIAM.

Appellant Claude Van Gunten, denied pension benefits by the trustees of the Teamsters Union Central States, Southeast and Southwest Areas Pension Fund, brought this action under section 502 of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1132, for a declaration of his pension rights and an award of benefits. The case was submitted on a stipulation of facts and issues. He appeals the District Court's decision that the trustees did not act arbitrarily or capriciously in denying his claim to pension benefits. We agree with the District Court's conclusion and affirm its judgment.

Appellant was continuously employed as a truck driver from 1939 until his retirement in 1973. He was employed by Dorwood Rental Co. (later called Transervice Systems) from 1953 to 1973. In addition to driving a truck appellant was a vice-president of Dorwood and owned 6% of its stock. Appellant's brother, Floyd Van Gunten, was the president of Dorwood and owned the remaining 94% of its stock.

Appellant did not have any supervisory authority at Dorwood. However, while all other Dorwood drivers were paid on an hourly basis, appellant was paid a salary. The salary was greater than the average pay of Dorwood's hourly employees. Appellant paid union dues from 1953 until his retirement in 1973, and Dorwood made contributions to the Teamsters Health and Welfare Fund on appellant's behalf during this entire period. Beginning April 30, 1955 Dorwood also made contributions to the Teamsters Pension Fund on behalf of its hourly employees. It did not, however, begin contributing to the Teamsters Pension Fund on appellant's behalf until 1964.

Appellant applied for pension benefits in 1974. The claim was denied, and appellant pursued his intra-fund remedies. In 1977 the Full Board of Trustees upheld the denial of his claim. The trustees based their decision on the conclusion that appellant was not a member of the collective bargaining unit from 1955 to 1964, and therefore was out of "covered employment" during this period and sustained a "break in service" that made him ineligible for benefits.

The standard for court review of a determination to deny pension benefits is whether the denial was arbitrary, capricious, or in bad faith. Maness v. Williams, 513 F.2d 1264 (8th Cir. 1975). In support of their conclusion that appellant was not a member of the collective bargaining unit between 1955 and 1964 the trustees relied on appellant's status as an officer of Dorwood; the fact that he was paid a different amount and on a different basis (a salary, rather than wages on the basis of hours worked or miles driven) than were the members of the collective bargaining unit; the fact that no contributions were made to the Pension Fund on appellant's behalf between 1955 and 1964, although the collective bargaining agreement required that such contributions be made for all members of the collective bargaining unit; and a letter to the Fund from the president of Dorwood in which appellant was identified as not a member of the collective bargaining unit. Based on this evidence and the terms of the Plan, the trustees' conclusion that appellee was not in the bargaining unit from 1955 to 1964 is neither arbitrary nor capricious. There is no claim that the trustees acted in bad faith.

A somewhat detailed analysis is necessary to review the trustees' interpretation of the terms of the Plan to deny benefits to appellee because he was not in the bargaining unit. In order to be eligible to receive benefits under the Plan appellant had to satisfy the following conditions: (1) he had to be at least 57 years of age; (2) at least 80 weeks of payments into the Fund must have been made on his behalf; (3) he had to have at least three years of service under a collective bargaining agreement; and (4) he had to have 20 years of continuous service in the industry as an employee. Pension Plan, article I, section 15. In the present case there is no disagreement that appellant fulfilled the first three of these requirements. The only point in dispute is whether appellant satisfied the provision requiring twenty years of continuous service in the industry as an employee.

The Plan defines "continuous service in the industry as an employee":

Continuous Service in the Industry as an employee shall mean accumulated years of employment prior to retirement calculated from the employee's last employment or re-employment date following the last break in service.

Pension Plan, article I, section 14. The trustees determined that appellant sustained a break in service from 1955 to 1964, the time when no pension contributions were made on appellant's behalf while they were being made on behalf of Dorwood's other employees. Because of the break in service, appellant did not accumulate twenty years of service in the industry by the time of his retirement in 1973.

Article I, section 13 of the Plan states that "(a) Break In Service, within the meaning of the Plan, shall occur if an employee is not in covered employment for a period of five consecutive years between February 1, 1955, and April 1, 1969, ..." There are two definitions of "covered employment." Article I, section 11(A) defines covered employment prior to the "effective date" and section 11(B) defines covered employment after the "effective date." Under article I, section 2 the "effective date" is the later of February 1, 1955, or the date an employer begins contributing to the Fund on behalf of its employees.

Dorwood began contributing to the Fund on April 30, 1955, so this is the applicable effective date. Thus, after April 30, 1955, employees of Dorwood were in "covered employment" only if they satisfied section 11(B). Section 11(B) defines covered employment after the effective date as "employment by an employer, as defined herein, who has satisfied the requirements for participation as established by the Trustees and who has agreed to be bound by the Trust Agreement." One further provision of the Plan is critical in this analysis. Article I, section 12, defines "year of employment." After the effective date a "year of employment" is a "calendar year ... in which contributions for a period of at least thirty-five weeks have been paid to the Pension Fund by the employer on behalf of the employee." Article I, section 12(b). Under this definition, appellant did not accumulate any years of employment between 1955 and 1964.

There is no express requirement in the above provisions that one be a member of a collective bargaining unit in order to be in "covered employment" after the effective date. However, after the effective date an employee only gets credit toward the requirement of twenty years of continuous service in the industry for years in which pension contributions are made on his behalf, and pension contributions are only made on behalf of members of a collective bargaining unit. It is perfectly consistent with the Plan that work which does not count toward years of employment is also not "covered employment," so may constitute a "break in service." The terms of the Plan do not compel the conclusion that after the effective date one must be a member of a collective...