Estate of Baird v. Teamsters Affiliates Pen. Plan, CIV.A. 02-1322.

317 F.Supp.2d 588

Estate of Robert BAIRD, by its Administratrix Mary BAIRD, Plaintiff, v. TEAMSTERS AFFILIATES PENSION PLAN, Board of Trustees of the Teamsters Affiliates Pension Plan, C. Thomas Keegel, John F. Murphy, Lester A. Singer, in their capacity as members of the Board of Trustees, Defendants.

No. CIV.A. 02-1322.

United States District Court, W.D. Pennsylvania.

March 31, 2004.

COPYRIGHT MATERIAL OMITTED

James T. Carney, Pittsburgh, PA, for Plaintiff.

Joseph J. Pass, Jubelirer, Pass & Intrieri, Pittsburgh, PA, for Defendant.

MEMORANDUM ORDER

CONTI, District Judge.

Pending before the court are the parties' cross-motions for summary judgment concerning the denial by defendants Teamsters Affiliates Pension Plan (the "plan") and Board of Trustees of the Teamsters Affiliates Pension Plan (the "board" and together with the plan, collectively referred to as "defendants") of a pension claim asserted by the Estate of Robert Baird, by its Administratrix Mary Baird ("plaintiff" or the "estate"). Plaintiff moves for summary judgment (Doc. No. 19) on the issue of liability, advancing the following four reasons why this court should grant summary judgment: (1) the board's action in denying plaintiff's pension claim was arbitrary and capricious and violated the plain language of the pension plan; (2) the plan itself violates the Employment Retirement Income Security Act's ("ERISA") minimum vesting standards, 29 U.S.C. § 1053; (3) the plan violates ERISA's commencement of benefit provision, 29 U.S.C. § 1059, by failing to ensure that pension benefits were paid within sixty days after the close of the plan year in which Baird terminated employment; and (4) the board's failure to advise Baird of the requirement to file an application prior to receiving pension benefits and its failure to issue a revised summary plan description ("SPD") constituted breaches of fiduciary duty and violations of several ERISA provisions. Defendants dispute plaintiff's arguments and filed a cross-motion for summary judgment (Doc. No. 21) asserting that the board's decision should be upheld. The material facts are set forth in a joint stipulation of material facts not in dispute filed by the parties. (See Doc. No. 18). For the reasons discussed below, the court will grant plaintiff's motion for summary judgment with respect to counts 1-4 and will deny defendant's motion. The court need not address counts 5-8 as those matters are rendered moot by the disposition of counts 1-4.

Background

The International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America ("Teamsters") established a pension plan on January 1, 1962 in order to help its union members (termed "participants" under the plan) build long-term financial security in contemplation of retirement. Joint Statement of Material Facts Not in Dispute ("J.S."), Ex. 1 at 7.¹ Although the principal offices of the plan and board are located in Washington, D.C., the plan covers a number of participants in Western Pennsylvania. J.S. ¶¶ 5-6. The plan is an "employee pension benefit plan" as defined by Section 3(2) of ERISA, 29 U.S.C. § 1002(2), and it is covered by the provisions of Title I of ERISA. Id. ¶ 2. The Teamsters established the plan as a defined benefit pension plan funded primarily by contributions from participating employer-affiliates. J.S., Ex. 1 at 10, 53. Id.² As a defined benefit pension plan, the plan uses a formula to determine retirement benefits based upon the amount of credited service worked by a participant and the participant's earnings. Id., Ex. 1 at 22. The board is the "administrator" of the plan, as that term is defined by 29 U.S.C. § 1002(16)(A)(I) and is entrusted with general administration of the plan. J.S. ¶ 3. The plan is governed by the provisions of a plan document and summary plan description ("SPD"). Id. ¶ 7.

Robert Baird was a participant in the plan because he was an elected official (Secretary-Treasurer) of Teamsters Local No. 636. Id. ¶ 11. After suffering a heart attack in 1984 and missing work for a period of time, Baird lost his bid for re-election in January 1985. Id. ¶ 13. Baird's final date of employment was January 31, 1985. Prior to that date, Baird was categorized as an "Active Member," defined in Section 1.3 of the plan as "a Member who is employed by an Affiliate at the date in question." Id.; Ex. 1 at 44.

The parties agree that, as of Baird's retirement date in January 1985, he had reached his "Normal Retirement Date," a term defined under the plan as:

(o) "Normal Retirement Date" of a Member means the earliest of i. or ii.:

i. the date the Member attains at least age 57, completes at least 15 years of Credited Service and completes at least 5 years of Vesting Service.

ii. the date the Member attains at least age 62 and completes at least either 10 years of membership in the Plan or 10 years of Credited Service and 5 years of Vesting Service.

Id. ¶ 14; Ex. 1 at 48. Baird met his Normal Retirement Date under subsection (i) because he had attained the age of 57, he completed over 15 years of credited service, and he had finished more than 5 years of vesting service under the plan. Id. ¶ 14. Thus, Baird was entitled to receive a normal retirement benefit under the plan. Section 4.1 of the plan, entitled "Normal Retirement," governs the award of benefits. That section states:

4.1-Normal Retirement. An Active Member who retires on his Normal Retirement Date shall receive on the first day of the month coincident with or next following his retirement a normal retirement benefit as provided in Section 5.1. An Active Member's right to his normal retirement benefit is nonforfeitable on the attainment of his Normal Retirement Date, except on reemployment as provided in Section 4.7.

Id.; Ex. 1 at 48.

On July 29, 1985, the plan sent Baird a letter advising him that he was eligible for pension benefits; attached to the letter were benefit application forms. Id ¶ 16; Ex. 2. When Baird failed to send the application forms to the plan, the plan contacted the offices of Teamsters Local No. 636 in order to confirm that it had Baird's correct address. After receiving confirmation that it did have the correct address, the plan the sent a second letter and application materials to Baird on August 19, 1986. Id. ¶ 17; Ex. 3. Six years later, on October 6, 1992, the plan sent a third letter to Baird along with benefit application forms. Id. ¶ 18; Ex. 4. The following year, after calling telephone directory to confirm Baird's residential address, the plan sent Baird a fourth and final letter accompanied by benefit application forms. Id. ¶ 19; Ex. 5. None of the four correspondences were returned by the United States Postal Service to the plan. Id. ¶ 20. Baird never responded to any of the four letters, nor did he fill out an application for pension benefits under the plan prior to his death on March 11, 1998. Id. ¶ 21-22.

On March 25, 1998, the plan sent Mary Baird, Robert Baird's wife, a letter informing her that she was entitled to a spousal benefit. The correspondence also contained a checklist and an application packet. Id. ¶ 25. Mrs. Baird submitted the benefit application in early June 1998, and the plan approved payment of the benefits on September 15, 1998. Id. ¶ 26. In October 1998, Mrs. Baird began receiving a monthly survivor benefit of $442.00 from the plan, and she continues to receive this monthly benefit at the present. Id. ¶ 27. Mrs. Baird, however, was puzzled by a sentence in the September 1998 letter sent by the plan that stated: "We regret that your husband was not able to enjoy the retirement benefits provided by this program." Id. ¶ 28; Ex. 8. In February 2001, Mrs. Baird's attorney contacted the plan inquiring why Robert Baird never received any pension benefits. Id. ¶ 28; Ex. 9. He also requested a copy of the text of the pension plan and the SPD. The plan responded in a March 27, 2001 letter that Baird had not received benefits because he failed to submit the required paperwork. Id. ¶ 29; Ex. 10. The plan also forwarded a booklet to Mrs. Baird's attorney containing a copy of the plan that had been in use since 1984. Id. ¶ 41.

On April 23, 2001, Mrs. Baird's attorney responded to the plan's letter with a formal request for the plan to pay Robert Baird's benefits to Mrs. Baird. Attached to that request was a three-page letter written by Mrs. Baird summarizing her husband's health and mental problems following his 1984 heart attack. Id. On May 17, 2001, the plan, through its administrative manager, rejected the formal request, advising Mrs. Baird that she was able to appeal that determination to the board. Id. ¶ 31; Ex. 12. The plan relied upon section 8.5 of the plan, which stated:

8.5-Applications and Misrepresentations. Benefits under this Plan are payable only upon the filing of an application in writing with the Trustees at the Plan's administrative office in the form and manner prescribed by the Trustees. Any material misrepresentations by the applicant upon which the Trustees relied in approving a benefit or portion of a benefit which the applicant was not entitled to receive under the Plan shall constitute grounds for the denial of such benefit or the portion of such benefit for the applicant and for the cancellation or recovery of such benefit or portion thereof.

Id.; Ex. 1 at 55.

Mrs. Baird appealed the decision to the board on July 13, 2001, enclosing all previous correspondences from the plan to her and her husband, along with three new pieces of correspondence for the board's consideration. Id. ¶ 31; Ex. 13. At a September 11, 2001 hearing, the board denied Mrs. Baird's appeal. Id. ¶ 33. Both parties stipulate that, pursuant to section 4.1, the plan makes retroactive benefit payments to living participants who apply for benefits after their retirement date. Id. ¶ 35. The parties further stipulate that the survivor benefits being received by Mrs. Baird are half of the pension benefits sh...