Smith v. Contini ( 2000 )

Opinions of the United
2000 Decisions States Court of Appeals
for the Third Circuit
3-9-2000
Smith v. Contini
Precedential or Non-Precedential:
Docket 99-5293
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Filed March 9, 2000
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 99-5293
STANLEY SMITH,
Appellant
v.
ROBERT CONTINI; JOHN BARNES; JOHN
KROMMENHOEK; RICHARD MULLER; JERRY
MCCORMICK; LAWRENCE MCDERMOTT; JOHN DOE
(name being fictitious); TEAMSTERS LOCAL 641 PENSION
FUND; PETER VAN LENTEN; ROBERT CIRONE, as
Trustee of the Teamsters Local 641 Pension Fund;
THOMAS FLANNERY, Trustee of the Teamsters Local 641
Pension Fund
On Appeal from the United States District Court
for the District of New Jersey
(D.C. Civ. No. 97-2692)
District Judge: Hon. William H. Walls
Argued January 25, 2000
BEFORE: GREENBERG, ROTH, and ROSENN,
Circuit Judges
(Filed: March 9, 2000)
David Tykulsker (argued)
David Tykulsker & Associates
161 Walnut Street
Montclair, NJ 07042
Attorneys for Appellant
Gary A. Carlson (argued)
Lynch Martin Kroll
300 Executive Drive, Suite 010
West Orange, NJ 07052
Attorneys for Appellees
OPINION OF THE COURT
GREENBERG, Circuit Judge.
I. INTRODUCTION
This matter is before the court on an appeal by Stanley
Smith in this Employee Retirement Income Security Act
("ERISA"), 29 U.S.C. SS 1001 et seq., benefits case.1 Smith
filed a complaint in the district court on May 23, 1997,
after the defendants denied him retirement benefits. Smith
asserted that defendants' construction of the pension plan
they managed violated ERISA, and thus he brought this
action seeking an injunction and other appropriate
equitable relief to bring their construction of the plan into
compliance with the statute. Of course, his ultimate goal is
to obtain a pension.
The Teamsters Local 641 Pension Fund (the "Local 641
Fund") plan is a multiemployer, defined benefits pension
plan within the meaning of 29 U.S.C. S 1002(2)(A)(37). The
individual defendants are trustees and officers of the Local
_________________________________________________________________
1. The district court exercised jurisdiction pursuant to 28 U.S.C. S 1331
and 29 U.S.C. S 1132(e)(1) and (f). We have jurisdiction pursuant to 28
U.S.C. S 1291. The defendants assert that the case is not ripe for
appellate review because the district court granted summary judgment
"dismissing the complaint" and not dismissing the action. See Appellee
Br. at 12 (citing Newark Branch, N.A.A.C.P. v. Harrison, 907 F.2d 1408,
1416 (3d Cir. 1990)). While it is true that the dismissal of a complaint
without prejudice in some circumstances may not be afinal and
appealable order because a court can grant leave to amend a complaint
even after dismissal, see id. at 1416, in this case the district court did
not dismiss the complaint without prejudice and it did not grant leave to
amend. Moreover, Smith has stood on his complaint. See Shapiro v. UJB
Fin. Corp., 964 F.2d 272, 278 (3d Cir. 1992). Thus, we have jurisdiction.
2
641 Fund who, by virtue of their positions, owe afiduciary
duty to Smith and the other beneficiaries of the Local 641
Fund plan.
The Local 641 Fund plan provides an array of retirement
benefits to employees covered by the plan. As is relevant
herein, the Local 641 Fund pension plan provides for two
types of benefits to covered employees upon their reaching
their normal retirement age. The first, a "Deferred Pension,"
is available to employees who accumulate at least ten years
of vesting service under the Local 641 Fund. See Local 641
Fund plan S 3.15, app. at 27. The second, a"Pro-rata
Pension," is available to certain employees who have been
members of other Teamsters locals, but did not attain a
minimum of ten years of employment with employers within
the jurisdiction of the Local 641 Fund so as to qualify for
a Deferred Pension. The Local 641 Fund entered into
reciprocal agreements with the pension funds of other
locals to provide for Pro-rata Pensions to certain employees
who then could accumulate service credits in more than
one fund so as to qualify for a pension.
With respect to its Pro-rata Pension provisions, the Local
641 Fund plan provides:
The Fund has a number of reciprocal agreements with
other pension funds under which service in the
jurisdiction of any of the reciprocating funds is
considered as service under this Fund for the purpose
of determining eligibility for benefits under the Fund.
* * * *
If an employee would meet the eligibility rules under
this Plan if his Related Credit was considered, but does
not meet the eligibility rules of the last Fund in whose
jurisdiction he worked, a Pro-rata pension based on
the time worked under this Plan only will be payable
even if the Employee has less than 10 Pension Credits
under this Plan.
Local 641 Fund plan S 3.21, app. at 28.
Generally, the Local 641 Fund plan calculates a Pro-rata
Pension based on the amount of the pension to which an
employee would have been entitled under the Local 641
3
Fund plan if he had earned all of his combined pension
credits under the jurisdiction of the Fund. See Local 641
Fund plan, Addendum A, app. at 37. The Local 641 Fund
then pays a pro-rata share, or percentage, of the pension to
the employee that equals the percentage of the combined
pension credits earned by the employee within the
jurisdiction of the Local 641 Fund. See id.2 Under this plan,
however, a Pro-rata Pension generally is paid only to those
employees who had earned a minimum of 15 years of
combined service credits. See id. at 28.
As is relevant here, the Local 641 Fund maintains
reciprocal agreements with the Teamsters Local 202 Fund
and the Teamsters Local 816 Fund. Under these
agreements, the Local 641 Fund agreed to apply service
credits earned by employees with the Local 202 and 816
Funds toward service credits earned in the Local 641 Fund
plan.
Smith, who was employed as a truck driver, earned two
quarters of service credits with the Local 202 Fund between
May and December 1966. From February of 1967 through
December of 1973, Smith was employed by Eastern
Express, Inc. ("Eastern Express") in New York City, earning
26 quarters of service credits with the Local 816 Fund.
Then Eastern Express moved to Elizabeth, New Jersey, and
its employees came under the jurisdiction of the Local 641
Fund. Smith, whom Eastern Express continued to employ
after the move, earned 16 quarters of service credits with
the Local 641 Fund between January 1974 and May 1977.
Pursuant to its reciprocal agreements with the Local 202
and 816 Funds, the Local 641 Fund accepted the service
credits Smith had earned within the jurisdiction of those
funds. Thus, when Smith terminated his covered
employment in 1977, he had earned a total of 44 service
credits (the equivalent of 11 years) -- 42 service credits (ten
and one-half years) as an Eastern Express employee.
On November 11, 1993, Smith, having turned 65, applied
for a pension from the Local 641 Fund. By letter dated
_________________________________________________________________
2. Apparently the employee obtains the full pension from all of the funds,
but we are not certain as to the mechanics of the program.
4
June 21, 1994, the Local 641 Fund acknowledged that
Smith had earned 11 years of service credits, but informed
him that he needed 15 years of service credits before he
could receive pension benefits. See id. at 85. Smith
appealed this decision on the ground that the Fund could
require only ten, not 15, years of service before an employee
was guaranteed pension benefits. The Fund denied Smith's
appeal by a letter dated September 22, 1994. See id. at 86.
Smith then brought this suit in the district court under
29 U.S.C. S 1132(a)(3), alleging that the defendants'
adherence to the 15-year service credit requirement was
contrary to ERISA and constituted a breach of their
fiduciary duty. In particular, Smith sought a declaration
that the defendants had breached their fiduciary duties and
an order enjoining them to conform the rules and
regulations of the Local 641 Fund plan to ERISA's
maximum ten-year vesting requirement. See app. at 7. He
also sought restitution by the award of a pension.
Ultimately, after proceedings that we need not describe,
the parties filed cross-motions for summary judgment. By
an opinion and order dated April 8, 1999, the district court
denied Smith's motion but granted the defendants' motion.
See Smith v. Contini, No. 97-2692 (D.N.J. Apr. 8, 1999). In
its opinion, the district court examined the Local 641
Fund's pension plan and determined it complied with
ERISA guidelines. The court noted that the ERISA provision
Smith thought applicable to this case, 29 U.S.C.
S 1053(a)(2)(A), required plans to provide that an employee's
right to his normal retirement benefit be nonforfeitable
upon the attainment of his normal retirement age, provided
that the employee have at least ten years of qualifying
service. See id. at 9-10. But the court determined that the
Deferred Pension offered by the Local 641 Fund plan
complied with ERISA's vesting provisions. See id. at 10 -11.
The district court also noted that the Local 641 Fund
plan provided a pension for those employees who had
performed less than ten years of vesting service within the
jurisdiction of the Local 641 Fund, but who had
accumulated service credits with a reciprocating fund. See
id. But under the reciprocal pension, an employee would
not receive any benefits unless he had a minimum of 15
5
years of combined service within the jurisdiction of the
various reciprocating funds. See id. It is undisputed that
Smith did not meet that threshold.
The district court concluded that the Pro-rata Pension
offered by the Local 641 Fund pursuant to its reciprocity
agreements with other funds was not governed by ERISA's
ten-year vesting requirements. See id. at 11. The court
stated:
Defendants are correct in their argument that ERISA
does not require them to provide pro-rata pensions or
reciprocal agreements with other funds. Under 29
U.S.C. S 1053(b)(1), defendants may disregard years of
service performed for an employer during a period in
which that employer did not maintain a pension plan
with the Local 641 Fund or a predecessor plan. The
pro-rata provisions in the Local 641 Fund's pension
plan do not violate the vesting requirements of ERISA,
29 U.S.C. S 1053(a)(2). Because neither the pro-rata
provisions nor the vesting schedule of the Local 641
Fund's pension plan violate ERISA, defendants' motion
for summary judgment to dismiss the complaint is
granted.
Id. at 11.
In addition to contending that the Pro-rata Pension was
subject to a ten-year maximum vesting requirement, Smith
argued that the Local 641 Fund should recognize his ten
and one-half years of service with Eastern Express as
vesting service under its plan, thereby entitling him to a
Deferred Pension. The district court found that"[a]lthough
plaintiff 's argument may have merit, the Court may not
consider it at this point because it deals with the
application of the terms of the pension plan to plaintiff, not
whether the terms of the pension violate ERISA. The Court
may not consider this argument unless and until plaintiff
brings an action under 29 U.S.C. S 1132(a)(1)(B) to
challenge his denial of benefits under the Local 641 Fund's
pension plan." See id. at 12. Smith appeals.
II. DISCUSSION
We exercise plenary review with respect to the district
court's decision on the cross-motions for summary
6
judgment. See Seibert v. Nusbaum, Stein, Goldstein,
Bronstein & Compeau, 167 F.3d 166, 170 (3d Cir. 1999);
Petruzzi's IGA Supermarkets, Inc. v. Darling-Delaware Co.,
998 F.2d 1224, 1230 (3d Cir. 1993). We will affirm only if
we conclude that the pleadings, depositions, answer to
interrogatories and admissions on file, together with the
affidavits, show that the defendants were entitled to
judgment as a matter of law on the basis of the undisputed
facts. See Fed. R. Civ. P. 56(c).
We start our discussion of the issues by recognizing that
ERISA neither mandates the creation of pension plans nor
in general dictates the benefits to be afforded once a plan
is created. See Dade v. North American Philips Corp., 68
F.3d 1558, 1561 (3d Cir. 1995) (citing Hlinka v. Bethlehem
Steel Corp., 863 F.2d 279, 283 (3d Cir. 1988); H.R. Rep. No.
93-807, 93d Cong., 2d Sess., reprinted in 1974
U.S.C.C.A.N. 4670, 4677). Thus, ordinarily only the plan
can create an entitlement to benefits. Consequently, "we are
required to enforce the Plan as written unless we can find
a provision of ERISA that contains a contrary directive."
Dade, 68 F.3d at 1562.
One of the areas in which ERISA requires express
provisions in benefit plans concerns the nonforfeitability,
often referred to as "vesting," of normal retirement benefits3
payable to an employee who reaches the normal retirement
age.4 In this regard, ERISA section 203(a), 29 U.S.C.
S 1053(a), provides in relevant part:
Each pension plan shall provide that an employee's
right to his normal retirement benefit is nonforfeitable
upon the attainment of normal retirement age and in
_________________________________________________________________
3. ERISA defines normal retirement benefits as "the greater of the early
retirement benefit under the plan, or the benefit under the plan
commencing at normal retirement age." 29 U.S.C.S 1002(22).
4. ERISA allows the normal retirement age to be defined by the plan or
sets the age as the later of the time a plan participant reaches the age
of 65 or reaches his or her fifth anniversary of participation in the
plan.
See 29 U.S.C. S 1002(24). The parties do not dispute that Smith had
attained the normal retirement age at the time he requested benefits
under the Local 641 Fund.
7
addition shall satisfy the requirements of paragraphs
(1) and (2) of this subsection.
(1) A plan satisfies the requirements of this pa ragraph
if an employee's rights in his accrued benefit derived
from his own contributions are nonforfeitable.
(2) A plan satisfies the requirements of this pa ragraph
if it satisfies the requirements of subparagraph (A), (B),
or (C).
(A) A plan satisfies the requirements of this
subparagraph if an employee who has completed at
least 10 years of service has a nonforfeitable right to
100 percent of the employee's accrued benefit derived
from employer contributions.5
The minimum vesting standards to which an employee
benefit plan is obligated to adhere are based upon"years of
service" as defined in ERISA section 203(b)(1). That section
provides:
In computing the period of service under the plan for
purposes of determining the nonforfeitable percentage
under subsection (a)(2) of this section, all of an
employee's years of service with the employer or
employers maintaining the plan shall be taken into
account, except that the following may be disregarded:
* * * *
(C) years of service with an employer during any
period for which the employer did not maintain the
plan or a predecessor plan, defined by the Secretary of
the Treasury
29 U.S.C. S 1053(b)(1).
Defendants successfully argued in the district court that
the Pro-rata Pension provided by the Local 641 Fund plan
to an employee who had not earned the requisite ten years
of service credit under its plan was not subject to the
_________________________________________________________________
5. The ten-year vesting requirement we set forth reflects the version of
ERISA section 203 in effect at all times relevant to the instant appeal.
Because the Local 641 Fund plan was ratified before March 1, 1986, the
parties agree that the current vesting limits do not apply.
8
ERISA ten-year vesting requirement even though the
employee overall had more than ten years of service credits.
Thus, they assert on this appeal that "ERISA's minimum
vesting standards [i.e., 29 U.S.C. S 1053] do not apply to
pro-rata pension benefits." See Appellees Br. at 24. In
support of this argument, defendants cite ERISA section
203(b)(1)(C), 29 U.S.C. S 1053(b)(1)(C), quoted above, for the
proposition that years of service earned under other plans
may be disregarded for the purposes of vesting. See id. at
19-20.
While we seem not to have had the opportunity to
address the specific question presented on this appeal, in
Hoover v. Cumberland, Maryland Area Teamsters Pension
Fund, 756 F.2d 977 (3d Cir. 1984), in an analysis
instructive here, we did consider whether pro-rata pensions
were subject to other limitations imposed by ERISA. In
Hoover, the plaintiffs, as members of Teamsters Local 453,
participated in the Cumberland Fund, a multiemployer
pension plan established by the local union and employers
engaged in collective bargaining with the local. See id. at
979. The Cumberland Fund was a qualified plan subject to
the vesting, funding, and participation requirements of the
Internal Revenue Code of 1954 and ERISA. See id. Starting
in 1967, the trucking companies employing the plaintiffs
began moving their terminals to Pittsburgh, Pennsylvania,
because of changes in interstate highway routes. See id.
The drivers affected by these relocations, including the
plaintiffs, moved with their employers to Pittsburgh and
transferred to Teamsters Local 249 whose members
participated in the Western Pennsylvania Teamsters and
Employers Pension Fund (the "Western Fund"). As a result
of the move, these drivers terminated their participation in
the Cumberland Fund and joined the Western Fund,
although the same company continued to employ them and
they remained members of the same international union.
See id.
Responding to the disruption in local union jurisdiction
and pension fund affiliation, a number of teamster pension
funds prepared a reciprocal agreement which the trustees
of the Cumberland Fund signed in 1968. See id. The
purpose of the reciprocal agreement was to provide full
9
pensions for workers with continuous membership in the
international union, but who, because of transfers to
different locals, might not accrue sufficient work credit
under any one plan to entitle them to full pension benefits.
See id. at 979-80. Under the reciprocal agreement, a union
member who transferred from the Cumberland Fund to the
Western Fund could cumulate his service credit from each
fund, and if his total combined service credit was sufficient
on retirement, he would receive proportional pension
benefits from each fund. See id. at 980. The reciprocal
agreement did not specify a particular benefit rate, but
rather required each fund to include in its plan documents
a method for calculating the partial pensions. See id. The
trustees of the Cumberland Fund triggered the dispute in
Hoover by amending the plan in a way that reduced the
pensions payable from the level in effect prior to the
amendment.
In response to the amendment, the Hoover plaintiffs
brought their suit alleging violations of ERISA section
204(g), 29 U.S.C. S 1054(g). See Hoover , 756 F.2d at 981.
Section 204(g) states that the "accrued benefit of a
participant under a plan may not be decreased by an
amendment of the plan, other than an amendment
described in section [302(c)(8)]." 29 U.S.C. S 1054(g)(1)
(emphasis added). Thus, we indicated in Hoover that "the
focus of our inquiry is whether the partial pension benefits
[under the reciprocal agreement involved in that case]
qualif[ied] as accrued benefits within the meaning of that
term under ERISA" so that section 204(g) precluded their
reduction. See Hoover, 756 F.2d at 981.
A reading of both the Cumberland Fund plan and the
legislative history of ERISA led us to conclude that the
plaintiffs' partial pension benefits earned pursuant to
reciprocity clauses satisfied ERISA's definition of an
accrued benefit. See id. at 982. Accordingly, we determined
that pension benefits provided pursuant to the reciprocity
agreements were subject to the section 204(g) amendment
limitations. See id. It was inherent in our determination
that the benefits provided pursuant to the reciprocity
agreements were provided under a covered plan for
purposes of ERISA because the restriction in ERISA section
10
204(g), 29 U.S.C. S 1054(g), is only on amendments of a
plan as ERISA defines that term.
ERISA section 203(a) is similar to the ERISA provision at
issue in Hoover because it sets forth nonforfeitability
requirements for pension plans. See 29 U.S.C. S 1053(a). As
in Hoover, we hold that the benefits provided to employees
pursuant to the Pro-rata Pension provisions of the Local
641 Fund plan are provided in a pension plan within the
meaning of ERISA. See 29 U.S.C. S 1002(2)(A) (defining
pension plan as any plan, fund or program that provides
retirement income to employees regardless of the method of
calculating contributions, benefits or method of distributing
benefits). Accordingly, the Pro-rata Pension is subject to the
vesting requirements set forth in ERISA section 203 and
thus an employee must be provided with a nonforfeitable
right to his normal retirement benefit if the employee has
completed ten years of service. See ERISA section
203(a)(2)(A), 29 U.S.C. S 1053(a)(2)(A).
Defendants' argument that the vesting requirements of
ERISA are not applicable here because the Local 641 Fund
was not required to provide its employees with a Pro-rata
Pension is misplaced. As we mentioned, a plan is not
required to provide any particular benefits to its employees
and thus the ERISA provisions become applicable only after
benefits are provided. See Dade, 68 F.3d at 1562. The Pro-
rata Pension provision here seeks to provide normal
retirement benefits to plan participants who reach normal
retirement age. ERISA sets forth clear vesting requirements
for the provision of such benefits. See ERISA section 203(a),
29 U.S.C. S 1053(a).
Defendants argue, however, that even if ERISA section
203(a) is found to be applicable, section 203(b)(1)(C) allows
the Local 641 Fund to disregard service with an employer
for any period in which the employer did not maintain the
Local 641 Fund plan. We reject this argument. The
underlying policy goal of ERISA is the protection of
retirement benefits. Congress's chief purpose in enacting
the statute was to ensure that workers receive promised
pension benefits upon retirement. See Nachman Corp. v.
Pension Benefit Guaranty Corp., 446 U.S. 359, 375, 100
S.Ct. 1723, 1733 (1980). In constructing ERISA, Congress
11
perceived the statute's accrual and vesting provisions as
being at the heart of that protection. See Hoover, 756 F.2d
at 985.
Unless an employee's rights to his accrued pension
benefits are nonforfeitable, he has no assurance that
he will ultimately receive a pension. Thus, pension
rights which have slowly been stockpiled over many
years may suddenly be lost if the employee leaves or
loses his job prior to retirement. Quite apart from the
resulting hardships, ... such losses of pension rights
are inequitable, since the pension contributions
previously made on behalf of the employee may have
been made in lieu of additional compensation or some
other benefit which he would have received.
S. Rep. No. 93-383, 93d Cong., 2d Sess., reprinted in 1974
U.S.C.C.A.N. 4890, 4930.
Although the concepts of accrued benefits and vested
benefits are distinct, the concerns expressed by this court
in Hoover have force here. In fact, a district court, relying
on the reasoning of Hoover, recently determined that the
vesting requirements set forth in ERISA section 203 applied
to service credits earned pursuant to reciprocity clauses.
See Helms v. Local 705 Int'l Bhd. of Teamsters Pension Plan,
1999 WL 965230, at *10-12 (N.D. Ill. Sept. 30, 1999)
(finding that plan that offered both a standard deferred
pension and a pension based upon reciprocity agreements
was required to adhere to ERISA's vesting provisions for
both pensions). This conclusion is consistent with our
reasoning in Hoover and with the concerns expressed by
Congress regarding the protection of accrued benefits and
vested rights.
The establishment of reciprocal pension agreements
promotes transfers of employees between employers within
funds that are parties to reciprocity agreements and
provides the employees with the apparent security that they
will receive a pension based upon their combined years of
service. See Helms, 1999 WL 965230, at *12. It would be
inconsistent with the purpose of ERISA to allow funds to
promote movement by employees in these circumstances
while at the same time subjecting such employees to
"penalties" for having so moved.
12
Further, by opting to provide pension benefits based
upon years or service earned under other funds, the Local
641 Fund chose not to avail itself of the provisions of
ERISA section 203(b) for the purposes of the Pro-rata
Pension. Section 203(b) is permissive in that it states that
a plan may disregard service with an employer during any
period in which the employer did not maintain the plan.
See 29 U.S.C. S1053(b)(1)(C). Thus, ERISA does not require
a plan to disregard such service. Having chosen to provide
a pension plan expressly based upon years of service
earned with certain employers not within the Local 641
Fund jurisdiction, the Local 641 Fund is barred from
disregarding those years of service for the purposes of
vesting under ERISA Section 203(a).
We reiterate that we agree with the defendants and the
district court that the defendants were under no obligation
under ERISA to provide for reciprocal agreements and Pro-
rata Pensions. Nevertheless, once having made the
determination to provide for such pensions, the defendants
were obliged to formulate a plan providing for vesting in
accordance with ERISA section 203(a)(2)(A), 29 U.S.C.
S 1053(a)(2)(A). Thus, this case represents a situation, not
unusual in the law, that an actor`s discretion in how it
engages in certain conduct is circumscribed, even though it
was not obliged to engage in the conduct in thefirst
instance.
Finally, the defendants argue that they cannot be
required to grant Smith a Pro-rata Pension because he
brought this action under ERISA section 502(a)(3), 29
U.S.C. S 1132(a)(3), rather than ERISA section 502(a)(1)(B),
29 U.S.C. S 1132(a)(1)(B). See Ream v. Frey, 107 F.3d 147,
151-53 (3d Cir. 1997). Smith contends, however, that he
appropriately did not bring this action under 29 U.S.C.
S 1132(a)(1)(B) because that section applies to actions
brought "under the terms of the plan" and he acknowledges
that the defendants acted consistently with the terms of the
plan. Yet in his view they nevertheless breached their
fiduciary duties because the plan as written does not
comply with ERISA.
Our recent opinion in Harte v. Bethlehem Steel Corp., No.
98-2052, 2000 WL 225896, at *1 (3d Cir. Feb. 29, 2000),
13
supports Smith's position that a fiduciary acting
consistently with a plan nevertheless may breach its
fiduciary duty. Smith thus proceeded properly in this case
under ERISA section 502(a)(3). But we will not linger on the
question of whether Smith sued under the wrong
subsection of ERISA section 502, as we expect that the
defendants now will apply the plan in accordance with the
ERISA ten-year vesting requirements. Moreover, we would
be reluctant to order benefits granted, a remedy that might
be appropriate relief under ERISA section 502(a)(1)(B), as
we do not know whether there is any impediment aside
from the ten-year vesting requirement to Smith's recovering
Pro-rata Pension benefits. For example, Smith may be
entitled to a Deferred Pension, and we doubt that he will be
entitled to obtain both pensions. Of course, in light of our
disposition, we are acting without prejudice to Smith's
taking such other steps as may be necessary to recover
Pro-rata Pension benefits.
In view of our foregoing conclusions, we will reverse the
summary judgment of the district court to the extent that
it held the Local 641 plan did not violate ERISA with
respect to the statute's ten-year vesting requirement. The
Pro-rata Pension requirements violate the vesting
requirements by making benefits contingent on obtaining
service credits beyond ERISA's permitted forfeiture periods
and defendants have a fiduciary obligation to comply with
the law.
In addition to arguing that the Local 641 Fund's Pro-rata
Pension violated ERISA's vesting provisions, Smith also
contends that by reason of his ten and one-half years of
service with Eastern Express, he was entitled to a Deferred
Pension from the Local 641 Fund plan. The district court
found that while this argument may have merit, it concerns
the application of the terms of the plan to Smith and not
whether the terms violate ERISA. The district court
concluded that such a challenge must be brought pursuant
to ERISA section 502(a)(1)(B), 29 U.S.C. S 1132(a)(1)(B),
dealing with the denial of benefits, and not in an action
seeking equitable relief to remedy a breach of fiduciary duty
under ERISA section 502(a)(3), 29 U.S.C. S 1132(a)(3). We
agree with the district court on this point and consequently
14
we will affirm the order for summary judgment to that
extent without further discussion and without prejudice to
a later action under section 502(a)(1)(B), if that should be
appropriate.
III. CONCLUSION
For the reasons set forth above, the order for summary
judgment of April 8, 1999, will be reversed in part and
affirmed in part. The district court erred when it concluded
that the Local 641 Fund plan's 15-year service credit
requirement for a Pro-rata Pension did not violate ERISA.
Accordingly, to the extent Smith sought to challenge the
propriety of the 15-year requirement, this matter will be
remanded to the district court for the entry of judgment in
favor of Smith and the fashioning of appropriate relief
pursuant to ERISA section 502(a)(3), 29 U.S.C. S 1132(a)(3).
The decision of the district court will be affirmed, however,
to the extent it held that Smith cannot proceed pursuant to
ERISA section 502(a)(3), 29 U.S.C. S 1132(a)(3), to assert
his rights to a Deferred Pension under the Local 641 Fund
plan.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
15