Minervini v. Board of Trustees for the Pension Fund of Plumbers Local 14

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 13-2457
____________
MICHAEL MINERVINI,
Appellant
v.
BOARD OF TRUSTEES FOR THE PENSION FUND OF PLUMBERS
LOCAL 14; XYZ CORP. 1-10, INDIVIDUALS; ABC 1-10 (all fictitious
names and/or entities who should be identified through discovery),
____________
Appeal from the United States District Court
for the District of New Jersey
(D.N.J. Civ. No. 11-cv-06149)
District Judge: Honorable William J. Martini
____________
Submitted Under Third Circuit LAR 34.1(a)
January 22, 2014
Before: FUENTES, FISHER, Circuit Judges
and JONES, II,* District Judge.
(Opinion Filed: September 23, 2014)
____________
OPINION
____________
*
The Honorable C. Darnell Jones, II, District Judge for the United States District Court
for the Eastern District of Pennsylvania, sitting by designation.
Jones, II, District Judge.
Michael Minervini brought suit against the Board of Trustees for the Pension Fund
of Plumbers Local 14 (the “Trustees”), alleging that the Trustees, who are the
administrators of the Pension Fund of Local 14 Plan (the “Plan”), an employee welfare
benefit plan as defined by the Employee Retirement Income Security Act of 1974
(“ERISA”), 29 U.S.C. § 1001, et seq., improperly denied Minervini’s application for
disability retirement benefits under the Plan. Minervini appeals a decision from the
United States District Court for the District of New Jersey granting the Trustees’ Motion
for Summary Judgment and denying Minervini’s Motion for Summary Judgment, finding
that the Trustees’ determination that Minervini was not entitled to disability retirement
benefits was neither arbitrary nor capricious.
For the reasons discussed below, we reverse the judgment of the District Court and
remand to the District Court with instructions to enter an order denying the Trustees’
motion for summary judgment and granting Minervini’s motion for summary judgment,
and for calculation of the benefits due to Minervini.
I. BACKGROUND
We write principally for the benefit of the parties and recite only the essential facts
and procedural history.
A. Minervini’s Employment
Minervini was a member of the Plumbers Local Union No. 14 of the United
Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of
the United States and Canada, AFL-CIO, (the “Union”), and worked in the Union’s
2
jurisdiction from 1978 until 2003, when he moved to Las Vegas, Nevada. Minervini’s
employers made pension contributions to the Union’s Plan until 2004. On July 31, 2008,
Minervini was injured during the course of his employment. In a decision rendered on
October 16, 2010, the Social Security Administration (“SSA”) determined that Minervini
had become statutorily disabled as of July 31, 2008, (the “Disability Determination”) and
was thus eligible to receive disability benefits as of January 2009.
Following the SSA’s Disability Determination, Minervini applied for a Disability
Pension Benefit under the Plan. The Trustees’ counsel informed Minervini that he was
“not eligible for a Disability Pension” under the Plan because he “incurred a Break-in-
Service prior to becoming disabled.” (App. 53A).1 Instead, Minervini, age 51, would be
1
The letter states:
Dear Mr. Minervini:
This office is co-counsel to the Plumbers Local 14 Pension Fund. I have been
provided with a copy of a letter from the Pension Fund's actuarial consultant
regarding your application for a disability pension benefit. You last earned
Credited Service during the fiscal year ended April 30, 2004, but incurred a Break-
in-Service on April 30, 2006. You were determined to have incurred a Disability
by United States Social Security on July 31, 2008, and you received an award
effective January 1, 2009.
You are not eligible for a Disability Pension from the Plumbers Local 14 Pension
Fund because you incurred a Break-in-Service prior to becoming disabled. You
are eligible for a Deferred Pension benefit payable at age 55 or later based on the
following accrued benefit.
Calculation of the Accrued Retirement Pension Benefit
Hours from 5/1/78 to 4/30/87: 16,616 x 2.5% = $ 415.40, plus
Hours from 5/1/87 to 4/30/04: 32,267 x 3.1% = $1.000.28
3
entitled to a Deferred Pension Benefit “payable at age 55 or later.” In subsequent
correspondence, the Trustees informed Minervini that, because he incurred a Break-in-
Service, he was no longer a current Plan Participant as of the Break-in-Service date.
Because only current Plan Participants could qualify for immediately payable Disability
Pension Benefits, Minervini was merely eligible for a Deferred Pension Benefit. (App.
68A; 72A).
B. The Plan and Summary Plan Description
Minervini was a union member covered by a collective bargaining agreement and
the Plan. The collective bargaining agreements established the Plan, which is an ERISA
Pension Plan administered by the Trustees. Because Minervini’s claims require
interpretation of the Plan and the Summary Plan Description (“SPD”), several key Plan
and SPD provisions are discussed herein.
The Plan provides in relevant part:
SECTION I. DEFINITIONS
(1) “Employee” means a person who is in a collective bargaining unit
represented by Local Union No. 14 of the United Association of
Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of
the United States and Canada, AFL-CIO and who is in the employ of any
one of the Contributing Employers.
Total Accrued Benefit payable at age 61: $1,415.68 effective March
1, 2020
If you elect to commence receipt of an Early Pension, the benefit will be reduced
5/9 of 1% for each month the benefit commencement date precedes age 61. If you
have any questions regarding the above, please contact the undersigned.
(App. 53A).
4
....
(2) “Participant” means an Employee in the active employment of an
Employer for at least one Hour of Service since the later of his date of first
employment in the Industry and the date immediately following his latest
Break in Service, if any. “Participant” shall include any Employee of the
Trustees and of the Union who have at least one Hour of Service after the
later of his date of employment by the Trustees or the Union and the date
immediately following his latest Break in Service, if any. It shall include
any Pensioner, Beneficiary or spouse receiving monthly benefits as of the
beginning of the Plan Year and any Vested Employee who is entitled to
deferred vested benefits.
******
SECTION II. PARTICIPATION
A. Every Employee who shall not have passed his 62nd birthday on May 1,
1962, shall become a Participant in the Plan as of the first date on which a
Contributing Employer becomes obligated to make a contribution to the
Fund on his behalf.
....
C. An Employee shall cease to be a Participant and incur a Break in
Service, only as follows:
(1) If he works less than a total of 500 hours in covered employment
for one or more Contributing Employers during a period of two (2)
Fiscal Years beginning May 1, 1978, (for the period January 1, 1968
through December 31, 1977, a total of 900 hours during five (5)
fiscal years; for the period May 1, 1962 through December 31, 1967,
the 900 hours were required to be worked during a period of 36
successive calendar months) except that this sub-paragraph shall be
suspended.
******
SECTION IV. BENEFITS
A. Normal Pension Benefit
....
B. Disability Award Pension Benefit
5
(1) A Participant who has been awarded a Social Security Disability
Pension shall be eligible for a Disability Award Pension Benefit
provided he has at least 10 years of credit for service . . . .
C. Early Pension Benefit
....
D. Deferred Pension Benefit
(1) A Participant who was a Participant on January 1, 1981 and has
at least 10 years of credit for service, either Past Service or Future
Eligibility Service, or a combination of both, and thereafter ceases to
work in the industry shall be eligible for a Deferred Pension benefit
payable at age 55 or later.
....
(App. 74A-79A (emphasis added)).
The SPD provides, in relevant part:
1. WHEN DO I BECOME A PARTICIPANT OF THE PLAN?
You become a Participant of the Pension Plan on the date your employer
become [sic] obligated to contribute to this Fund on your behalf pursuant to
a collective bargaining agreement.
....
3. WHEN WILL I RECEIVE MY NORMAL PENSION BENEFIT?
You may retire on a Normal Pension Benefit on the earlier of:
a) the fifth anniversary that you commenced participation in the
Plan, or
b) the time you acquired 5 years of credited service under the Plan
and attain age 61.
Payment of benefits must begin by April 1st of the calendar year following
the calendar year which you attain age 701/2.
4. MAY I RETIRE BEFORE AGE 61?
Yes, you may retire prior to age 61 if you satisfy one of the following
eligibility requirements:
a) Early Retirement- If you are at least age 55 and have earned a
minimum of 10 years of Credited Service while a Participant of the Plan,
you may retire with an Early Reduced Retirement Benefit.
b) Disability Retirement - If you become disabled at any age, you may
retire with a Disability Award Pension Benefit if you have been awarded a
U.S. Social Security Disability Award Certificate and have earned at least
6
10 years of credited service. The benefit will be payable retroactive to the
date of entitlement to disability benefits from the Social Security
Administration.
....
6. HOW IS MY NORMAL PENSION BENEFIT CALCULATED?
The Pension benefit is calculated in 2 parts as follows . . . If you had
interruptions in your service and incurred a Break in Service or multiple
Breaks during your career, your benefit may be calculated differently.
Generally, when you have a Break in Service, the benefit you earned prior
to the Break in Service is calculated at the benefit rate(s) in effect when the
Break occurred. Any service you earn following the Break(s) is calculated
when you cease employment or have another Break.
....
15. CAN I LOSE MY PARTICIPATION IN THE PLAN?
Yes, you may terminate your participation in the Plan if you incur a Break-
in-Service. A Break in Service occurs if you work less than 500 hours for a
contributing employer during a period of two successive fiscal years.
....
16. IF I HAVE A BREAK IN SERVICE, DO I LOSE ALL SERVICE
CREDITS I HAD EARNED?
Generally, you do not lose the service credits you had earned if you had at
least 5 years of Credited Service and worked at least one hour since May 1,
1999 (10 years if you last worked prior to May 1, 1999), and had earned a
‘vested’ right to a Pension . . . . Once you become ‘vested’ you cannot
forfeit your service.
....
(App. 45A-48A (emphasis added)).
C. Minervini’s Lawsuit
Minervini’s Complaint alleges that the Trustees abused their discretion in
determining that he was not entitled to Disability Pension Benefits under the Plan. The
parties submitted cross-motions for summary judgment. The District Court entered
summary judgment in favor of the Trustees, finding that the Trustees’ determination that
7
Minervini was not entitled to Disability Pension benefits was not arbitrary and capricious.
This timely appeal followed.
II. DISCUSSION
The District Court had jurisdiction under 29 U.S.C. § 1132(e). This Court
likewise has appellate jurisdiction under 28 U.S.C. § 1291. We exercise plenary review
of a district court’s resolution of cross-motions for summary judgment and apply the
same standard as the district court. Howley v. Mellon Fin. Corp., 625 F.3d 788, 792 (3d
Cir. 2010). Summary judgment is proper “if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a). Where, as here, the benefit plan gives the administrator
discretionary authority to determine the eligibility for benefits, we review the Trustees’
decision under an arbitrary and capricious standard. Doroshow v. Hartford Life &
Accident Ins. Co., 574 F.3d 230, 233 (3d Cir. 2009). Under an arbitrary and capricious
standard of review, “a court can overturn the decision of the plan administrator only if it
is without reason, unsupported by substantial evidence or erroneous as a matter of law.”
Id. at 234. A decision is supported by substantial evidence if there is sufficient evidence
for a reasonable person to agree with the decision. Courson v. Bert Bell NFL Player Ret.
Plan, 214 F.3d 136, 142 (3d Cir. 2000).
Minervini argues that the Trustees’ decision was arbitrary and capricious because
he satisfied the qualifications for Disability Retirement Benefits under the Plan and SPD.2
2
The S.P.D. states, “If you become disabled at any age, you may retire with a Disability
Award Pension Benefit if you have been awarded a U.S. Social Security Disability
8
The parties do not dispute that Minervini incurred a “Break-in-Service.” The gravamen
of the dispute, however, was whether Minervini’s “Break-in-Service” caused him to
cease being a Participant under the Plan, and thus disqualify him for Disability Pension
Benefits.
Relying on Section II (C) of the Plan, the Trustees determined, and the District Court
agreed, that Minervini’s Break-in-Service meant that he was no longer a Plan Participant.
This conclusion is belied by the plain language of the Plan and SPD, which make clear
that a Break-in-Service merely affects the calculation of pension benefits, not whether an
employee is eligible.3 In defining the term “Participant,” Section I (2) of the Plan states
that “‘Participant’ . . . shall include . . . any Vested Employee who is entitled to deferred
vested benefits.” (App. 74A (emphasis added)). Because Minervini had accrued the
requisite amount of credited service, he was entitled to “vested benefits”─a fact that the
Trustees do not dispute. Thus, Minervini meets the definition of “Participant” pursuant
to the Plan and SPD.
Curiously, despite determining that Minervini was not a Participant and therefore not
entitled to Disability Pension Benefits, the Trustees conceded that Minervini is entitled to
Award Certificate and have earned at least 10 years of credited service.” (App. 45A). It
is undisputed the SSA awarded Minervini disability benefits and that Minervini earned
“at least ten years of credited service.”
3
The SPD states, “If you had interruptions in your service and incurred a Break in
Service or multiple Breaks during your career, your benefit may be calculated
differently.” (App. 46A). The plain language of the SPD contradicts the Trustees’
argument (endorsed by the District Court) based on Section II (C) of the plan, which
would eliminate any retirement benefit for those that incur a Break-in-Service. Such a
conclusion would be inconsistent with the Plan and SPD language.
9
a Deferred Pension Benefit upon his 55th birthday. Under the Plan, however, eligibility
for any benefit is conditioned on an employee’s status as a Participant.4 The
determination that Minervini would be eligible for a Deferred Pension Benefit, but not a
Disability Retirement Benefit eschews reason. A concession that Minervini is entitled to
a Deferred Pension Benefit is an acknowledgment that Minervini is a Plan Participant.
Having made this concession, the Trustees cannot concomitantly conclude that Minervini
is not a Participant for the purposes of Disability Pension Benefits. Interpreting a single
defined term - in this case “Participant” - in incongruent ways within the same ERISA
Plan is the emodiment of arbitrary and capricious.5
III. CONCLUSION
Because the Trustees’ decision to deny Disability Pension Benefits was arbitrary
and capricious, we reverse the judgment of the District Court and remand to the District
Court with instructions to enter an order denying the Trustees’ motion for summary
4
SECTION IV. BENEFITS
....
B. Disability Award Pension Benefit
(1) A Participant . . . shall be eligible for a Disability Award Pension
Benefit . . . .
....
D. Deferred Pension Benefit
(1) A Participant . . . shall be eligible for a Deferred Pension benefit . . . .
(App. 78A-79A (emphasis added)).
5
The District Court justified the Trustees’ incongruent finding by stating the SPD
“suggest[s] that the Plan distinguishes between current and former Participants.” Under
this interpretation, one could plausibly be eligible for Deferred Pension Benefits, but not
Disability Pension Benefits based on status as a “current” or “former” Plan Participant.
Nothing in the SPD or Plan documents, however, conditions eligibility for vested benefits
on one’s status as a “current” or “former” Plan Participant.
10
judgment and granting Minervini’s motion for summary judgment, and for calculation of
the benefits due to Minervini.
11