Caban v. Employee Security Fund

14-4593
Caban v. Employee Security Fund
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
Rulings by summary order do not have precedential effect. Citation to a summary order filed on or
after January 1, 2007, is permitted and is governed by Federal Rule of Appellate Procedure 32.1
and this court’s Local Rule 32.1.1. When citing a summary order in a document filed with this
court, a party must cite either the Federal Appendix or an electronic database (with the notation
“summary order”). A party citing a summary order must serve a copy of it on any party not
represented by counsel.
At a stated Term of the United States Court of Appeals for the Second Circuit, held at
the Thurgood Marshall United States Courthouse, at 40 Foley Square, in the City of New York,
on the 3rd day of November, two thousand fifteen.
Present: ROBERT A. KATZMANN,
Chief Judge,
ROSEMARY S. POOLER,
DENNY CHIN,
Circuit Judges.
________________________________________________
WILLIAM CABAN,
Plaintiff-Appellant,
v. No. 14-4593-cv
EMPLOYEE SECURITY FUND OF THE ELECTRICAL
PRODUCTS INDUSTRIES PENSION PLAN, PENSION
TRUST FUND OF THE PENSION HOSPITALIZATION
AND BENEFIT PLAN OF THE ELECTRICAL
INDUSTRY,
Defendants-Appellees.
________________________________________________
For Plaintiff-Appellant: NOAH A. KINIGSTEIN, New York, NY.
For Defendants-Appellees: PETER D. DECHIARA, Cohen, Weiss and Simon LLP, New
York, NY.
Appeal from the United States District Court for the Eastern District of New York (Gold,
M.J.).
ON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED,
and DECREED that the judgment of the district court is AFFIRMED.
Plaintiff-Appellant William Caban appeals from a judgment of the district court, entered
November 19, 2014, that granted summary judgment in favor of the defendants in Caban’s action
to recover disability pension benefits pursuant to the Employee Retirement Income Security Act
of 1974 (“ERISA”), 29 U.S.C. § 1132(a)(1)(B). We assume the parties’ familiarity with the
relevant facts, the procedural history, and the issues presented for review.
Caban was an electrical worker and a member of Local 3 of the International
Brotherhood of Electrical Workers, which is affiliated with the AFL-CIO (“Local 3”). Over the
course of several decades, Caban worked for various employers in the electrical industry.
Pursuant to collective bargaining agreements with Local 3, many of those employers contributed
to the two benefit plans named as defendants in this case: the Employee Security Fund of the
Electrical Products Industries Pension Plan (the “ESF Plan”) and the Pension Trust Fund of the
Pension Hospitalization and Benefit Plan of the Electrical Industry (the “PTF Plan”). Both the
ESF Plan and the PTF Plan are administered by the Joint Board of the Electrical Industry (the
“Joint Board”), but they are separate pension plans, have separate Boards of Trustees, have
different contributing employers, provide different benefits, and are subject to different
eligibility requirements.
On June 24, 2005, while working for QNCC Electrical Contracting Corp., an employer
that contributes to the PTF Plan, Caban fell approximately forty feet from a ladder, sustaining
serious injuries. Caban applied for workers’ compensation benefits, which he received from
approximately July 20, 2006 through August 2010 in the amount of approximately $400 per
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week. Caban filed a third party lawsuit, and when that lawsuit was settled, Caban repaid the
workers’ compensation provider for the benefits he had received in accordance with Section 29
of the New York Workers’ Compensation Law. During the intervening time period, Caban also
applied to the Joint Board for disability pension benefits. The Joint Board initially denied his
application, but, after this action was filed, reversed its decision and awarded him a monthly
disability pension of $490.65 under the PTF Plan, payable retroactive to September 2010. Caban
appealed various aspects of the Joint Board’s determination to the PTF Board of Trustees, which
denied his appeal, and then raised his claims in the district court. The district court granted
summary judgment in favor of the defendants on all of Caban’s claims.
In the present appeal, Caban contends that: (1) the district court applied the wrong
standard in its review of the PTF Plan’s determination; (2) the district court erred in granting
summary judgment in favor of the defendants with respect to the start date of Caban’s disability
pension benefits; and (3) the district court erred in granting summary judgment in favor of the
defendants with respect to the amount of Caban’s monthly disability pension.
In an ERISA action, we review the district court’s grant of summary judgment de novo,
applying the same legal standard as the district court. Hobson v. Metro. Life Ins. Co., 574 F.3d
75, 82 (2d Cir. 2009). “Summary judgment is appropriate only if, after drawing all permissible
factual inferences in favor of the non-moving party, there is no genuine issue of material fact and
the moving party is entitled to judgment as a matter of law.” O’Hara v. Nat’l Union Fire Ins.
Co. of Pittsburgh, 642 F.3d 110, 116 (2d Cir. 2011).
Caban argues, first, that the district court applied the wrong standard of review. In an
ERISA action to enforce the terms of a benefit plan, the plan administrator’s interpretation “is to
be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary
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discretionary authority to determine eligibility for benefits or to construe the terms of the plan.”
Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). Where the written plan grants
the administrator such discretionary authority, the district court reviews for abuse of discretion,
and “will not disturb the administrator’s ultimate conclusion unless it is ‘arbitrary and
capricious.’” Pagan v. NYNEX Pension Plan, 52 F.3d 438, 441 (2d Cir. 1995) (quoting
Firestone, 489 U.S. at 115). “This standard is ‘highly deferential,’ and ‘the scope of judicial
review is narrow.’” Roganti v. Metro. Life Ins. Co., 786 F.3d 201, 211 (2d Cir. 2015) (quoting
Celardo v. GNY Auto. Dealers Health & Welfare Trust, 318 F.3d 142, 146 (2d Cir. 2003)).
Nonetheless, where the plan administrator has a conflict of interest, “that conflict must be
weighed as a ‘factor in determining whether there is an abuse of discretion.’” Firestone, 489
U.S. at 115 (quoting Restatement (Second) of Trusts § 187 cmt. d (1959)) (alterations omitted).
A conflict of interest exists, for example, where “an administrator both evaluates and pays
benefits claims.” McCauley v. First Unum Life Ins. Co., 551 F.3d 126, 133 (2d Cir. 2008); see
also Durakovic v. Bldg. Serv. 32 BJ Pension Fund, 609 F.3d 133, 138 (2d Cir. 2010)
(“Employer-administrators have a categorical conflict.”). The weight to be accorded to such a
conflict in determining whether there was an abuse of discretion depends on the “likelihood that
it affected the benefits decision.” Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 117 (2008).
Accordingly, “[n]o weight is given to a conflict in the absence of any evidence that the conflict
actually affected the administrator’s decision.” Durakovic, 609 F.3d at 140.
Here, there is no dispute that the written terms of the PTF Plan grant the PTF Board of
Trustees discretionary authority to determine eligibility for and calculate the amount of benefits
to be awarded. Accordingly, the district court correctly applied the arbitrary-and-capricious
standard. See McCauley, 551 F.3d at 132–33. Caban contends, however, that the district court
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erred by giving no weight to the Joint Board’s purported conflict of interest.1 Specifically,
Caban argues that the Joint Board’s various errors and delays in processing his claim—such as
certain inaccuracies in its communications with him (which were later corrected), the delay in
processing his appeal, the Joint Board’s failure to notify him that he was eligible to file for a PTF
pension, and the Joint Board’s reversal of its initial denial of benefits—establish a high
likelihood that the Joint Board’s conflict of interest affected its benefits determination.
However, as the district court correctly held, these facts suggest only that the Joint Board
suffered from administrative deficiencies, not that its decisions were affected by a conflict of
interest. Indeed, the facts here bear none of the indicia of conflicted decisionmaking that we
have found in prior cases. See, e.g., Durakovic, 609 F.3d at 140 (finding that conflict affected
decision where defendant funds “summarily dismissed” the claimant’s expert report, “which was
vastly more detailed and particularized than the report on which the Funds relied”); McCauley,
551 F.3d at 135–36 (finding that conflict affected decision where plan administrator refused to
consider the claimant’s evidence of his disability, giving an “unreasonable and deceptive”
explanation for its decision); see also Roganti, 786 F.3d at 218 (holding that “an irrational
decision or a one-sided decisionmaking process can alone constitute sufficient evidence that the
administrator’s conflict of interest actually affected the challenged decision”). Accordingly, we
find no error either in the standard of review applied by the district court or in its conclusion that
the Joint Board’s purported conflict of interest was entitled to no weight.
Second, Caban argues that the district court erred in granting summary judgment to the
defendants with respect to the start date of his disability pension benefits. Specifically, the Joint
Board determined that, because Caban received workers’ compensation benefits through August
2010 in an amount exceeding his disability pension benefits, the latter should be reduced to $0
1
We assume without deciding that the Joint Board was, in fact, conflicted.
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during that period. The Joint Board’s decision relied on Section 4.04 of the PTF Plan, which
states: “In all cases, a Participant who is eligible to receive a Disability Pension shall have the
monthly benefit reduced by the monthly amount of the statutory workers’ compensation benefits
payable to the Participant.” J.A. 139. Caban contends that this provision should not apply to
him because he was required by New York law to reimburse his workers’ compensation carrier
from the settlement proceeds of his third-party tort suit.
However, on its face, Section 4.04 applies “[i]n all cases.” J.A. 139. Nothing in the PTF
Plan indicates that Caban’s repayment of the workers’ compensation lien alters the Joint Board’s
right to offset his disability benefits by the amount of the workers’ compensation benefits he
received. The Joint Board’s refusal to read in such a provision was neither arbitrary nor
capricious; to the contrary, it was consistent with the written terms of the PTF Plan. See
Connors v. Conn. Gen. Life Ins. Co., 272 F.3d 127, 137 (2d Cir. 2001) (“The fact that [the
plaintiff] ultimately repaid his workers’ compensation benefits does not change [the insurer’s]
rights under the Policy. Any other result would presume that additional benefits are due to [the
plaintiff] that were not stated in the insurance policy by the parties to the insurance contract.”).
Accordingly, the district court’s grant of summary judgment regarding the start date of Caban’s
disability pension benefits was not in error.
Third, Caban argues that the district court erred in granting summary judgment in favor
of the defendants with respect to the Joint Board’s calculation of his monthly pension benefits as
$490.65. Caban contends that the Joint Board should have used the pension credit rate
applicable to “A”-rated journeypersons because he was highly skilled, performed the same work
as an “A”-level employee, and occasionally worked jobs that paid the “A” rate. However,
Section 4.01 of the PTF Plan provides that the “A” rate is applicable to participants “who
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separate from Covered Employment on or after May 15, 2003, who were receiving the ‘A’ rate
of pay and whose Employer was remitting the ‘A Contribution Rate.’” J.A. 136. We agree with
the district court that the most natural reading of this language is that the participant’s pension
benefits depend on his rate of pay and employer contribution at the time he separated from
covered employment. Because it is undisputed that Caban was receiving less than the “A” rate
of pay at the time he became disabled, the Joint Board correctly applied the formula set forth in
Section 4.05 of the PTF Plan, J.A. 140, which applies to participants who received other than the
“A” rate of pay at the time of separation.
Caban further argues that, even if he was not entitled to the “A”-rate pension, the Joint
Board used the wrong variables to calculate his pension benefits. Specifically, he argues that the
Joint Board should have used different figures for the pension credit rate, for the “A” level
employer contribution rate, and for his own employer’s contribution rate, resulting in a monthly
pension benefit of $1,152. However, Caban fails to cite any record evidence supporting his
proposed rates. As the district court correctly determined, the plain terms of the PTF Plan and
the collective bargaining agreement support the calculations performed by the Joint Board.
Accordingly, the district court’s grant of summary judgment on this claim was appropriate.
Finally, Caban argues that the Joint Board failed to provide adequate notice of the
reasons for its decision. See Juliano v. Health Maint. Org. of N.J., Inc., 221 F.3d 279, 287 (2d
Cir. 2000) (“The purpose of [the ‘full and fair review’] requirement is to provide claimants with
enough information to prepare adequately for further administrative review or an appeal to the
federal courts.” (alteration in original) (quoting DuMond v. Centex Corp., 172 F.3d 618, 622 (8th
Cir. 1999)). In particular, he argues that the Joint Board failed to explain how the reciprocal
agreement between the PTF Plan and the ESF Plan affected the value of the pension credits he
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earned under the respective plans. Contrary to Caban’s contentions, however, the Joint Board
sent him a detailed letter dated February 29, 2012, which explained how it calculated his
benefits, including the application of the reciprocal agreement. The Joint Board further supplied
him with worksheets showing the specific calculations used. Accordingly, the Joint Board met
its obligation to provide adequate notice of the reasons for its decision, and the district court’s
grant of summary judgment was not in error. See Bowman Transp., Inc. v. Ark.-Best Freight
Sys., Inc., 419 U.S. 281, 285 (1974) (“The agency must articulate a ‘rational connection between
the facts found and the choice made.’”).
We have considered the Plaintiff-Appellant’s remaining arguments and find that they
lack merit. For the reasons given, we AFFIRM the judgment of the district court.
FOR THE COURT:
CATHERINE O’HAGAN WOLFE, CLERK
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