Jorden Hodgins v. Central States Southeast and Southwest Areas Pension Fund ( 1980 )

BOYCE F. MARTIN, Jr., Circuit Judge.

This case concerns the eligibility of plaintiff-appellee Hodgins to receive pension benefits from defendant-appellant Central States Southeast and Southwest Areas Pension Fund. (The Fund). After the Trustees of the Fund denied his application for benefits, Hodgins filed suit in district court. The district court awarded him $188.66 per month for life, retroactive to January 1, 1976, plus statutory interest to date of judgment. The Fund appeals.

Eligibility for pension benefits is contingent upon twenty years of continuous service in a Teamsters Union industry. This service must be in the capacity of an “employee,” as distinguished from a “supervisor.” The concept of “continuous service” is subject to the “break in service” rule. A “break in service” occurs if an employee is not in covered employment for a period of five consecutive years between February 1, 1955 and April 1, 1969. In the event of a break in service, the employee received continuous service credit only for the period of re-employment following the break. (Pension Plan, Article I, §§ 13, 14).

John F. Ivory Company (the company) employed Hodgins in 1938 as a van helper, assigned to duty unloading moving vans. He became a member of the Teamsters Union at that time. After serving in the Armed Forces, Hodgins worked for the company as a van driver and warehouseman. Over the years, Hodgins gradually assumed increased responsibility; he began handling lease agreements with contract truckers and making vehicle inspections for. the company. At the same time, however, he continued driving a van and working in the warehouse.

In 1960, the company initiated a pension plan for its management personnel. The program was offered only to Hodgins and fourteen other key people. Hodgins enrolled in the plan, but continued to pay union dues as in the past. The company continued to pay him at the usual hourly rate for drivers and made the customary payments to the Fund on his behalf.

In 1963, Hodgins left the company and went to work in a similar capacity for Three Ivory Brothers Company, a non-affiliated concern. His former employer was aware of his new job and knew where to contact him if necessary.

Meanwhile, in 1969, the local union and the company agreed that the status of several company employees, including former employee Hodgins, should be reclassified as “supervisory.” The company informed the union that Hodgins had enjoyed supervisory status since 1952. The union, in turn, notified the Fund that Hodgins and certain others had ceased to be “employees” many years before. As a result of this change, the company later secured a refund of payments made to the Fund on behalf of the reclassified workers; the company retained this refund.

All the affected employees except Hod-gins, who was no longer working for the company, were contacted about the matter. They were given the option of limiting their work to duties consistent with “employee” status. The affected personnel were told that if they elected this option, no “break in service” for pension purposes would be attributed to them and they would remain eligible for full benefits. Failure to return to “employee” classification would, of course, result in a “break in service” and consequent loss of benefits. No one ever notified Hodgins about this change. He was unaware of his reclassification and the resulting retroactive application of the break in service rule against him until 1971, when the Trustees rejected his application for benefits.

The district court held that the Trustees’ denial of Hodgins’ application for benefits was “arbitrary and capricious.” Hodgins had no notice, actual or legal, that he had been a “supervisor” for many years and was therefore ineligible for pension benefits. He had no opportunity to make alternative financial plans for retirement.

Although Hodgins’ whereabouts were known at the time of the reclassifications, no effort was made to apprise him of his changed status. Unlike the other reclassified personnel, he was given no option to retain his pension benefits by returning to employee status.

Finally, the trustees’ decision is inherently inconsistent. Reiherzer v. Shannon, 581 F.2d 1266, 1273 (7th Cir. 1978). In Reiher-zer the trustees stated that for purposes of the “continuous service in the industry” eligibility requirement, Reiherzer was self-employed from 1959 to 1968. The Seventh Circuit found the trustees’ decision was inherently inconsistent because nothing occurred in 1959 in Reiherzer’s employment to justify reclassifying him “self-employed” and thus ineligible. Similarly, because Hodgins continued to pay union dues, receive his usual hourly pay as a driver and the company continued to contribute to the Fund on his behalf, his status was not obviously altered.

For the foregoing reasons, the decision of the district court is affirmed.