UNITED STAT ES DIS TRICT COURT F OR THE D ISTRIC T OF CO LU M BIA

) HALLINE O VERBY, et al . ) ) P laintif fs, )

) v. ) Civil Action No. 06-1356 (RM C) ) NA TIO NA L A SSOC IA TIO N O F LET TER CARRIERS, et al . ) ) ) Defendan ts. ) ) M EM OR

AN DU M OP IN ION This is an action ar ising unde r the Employ ee Re tirement Income Sec urity Act of 1974 (“ERI SA”), 29 U.S.C. § 1001 et seq. Halline O v er b y wa s a letter c arr ier with the United States Pos ta l Se rv ic e and

the n a n o ff ic e r of the Natio na l As so c ia tio n of L e tte r C arr ie rs (“NA L C” ) u nti l hi s retire ment in Febr

uary 1991. He a

nd his wife Pauline sue N AL C, the NAL C Annuity Trust Fund (“ AT F ” or

“ F un d” ), a nd

the F un d’ s tr

us te e s b e c a

us e the F un d h a s de nie d that Mr s. Ov e rb y is e lig ibl e fo r a s u r v iv o r ’ s b e n e f

it u p o nM r . O v e r

b y ’ s d e a th

. T h e O v e r

b y s ma r r ie d f o u r mo n th s a f

te r M r. Over by retire d and have now bee n marrie d for ove r 17 y ear s. The F und insists , howeve r, that the rule for elig ibilit y

– which used to be that a spouse ha d to be marr ied to an annuitant f or at lea st one y ear befor e the a

nnuitant’s death – wa s chang ed in 1985 to require th at a s p o u s e be married to a n annuitant bef

ore r etireme nt to be elig ible for a survivor’s benef it. The Court finds that the Fund’ s trustees ne ver pr operly

amende d the ATF to drop a survivor’ s benef it for a spous e marrie d to an annuitant for at least one y ear at the time of the annuitant’s de ath, that such a benef it accr ued to the Over by s, and that Mrs. Ove rby is entitled to a survivor bene fit upon Mr. Over by ’s death.Citations t o testimony at the evide ntiary

hear ing a re to the tra

nscript of June 11, 12, and 1 16, 2008, and ar e cited a s “Tr. I ,” “T r. I I ,” or “ Tr. I I I ” re spectively , followed by a pag e number

. -2- I. F INDING S OF F ACT The Court held a

three -day

bench tr ial in this case on J u n e 1 1 , 1 2 , and 16, 2008. 1 Fr om the entirety

of the re cord, inc luding the demea nor and cre dibilit y of the live witnesses and the

c re dib ili ty

of wi tne sse s o the rw ise pr e se nte d, the Court make s th e fo llo wi ngfi nd ing s o f f a c t. 1. NAL C i s a national labor union whic h repr esents city delivery car riers e mploy ed by

the United States Postal Service

. NAL C sponsors a retirement plan called the ATF

. The ATF

c ov e rs NA L C’ s n a tio na l o ffi c e rs , n a tio na l bu sin e ss a g e nts , c e rt a in b ra nc h o ff ic e rs , he a dq ua rt e rs e mploy ees, and em

plo y e e s o f N AL C’ s H e a lthPlan, bu t no t po sta l c arr ie rs . P l s . ’ Ex . 27 at P 130. At the end of 2004, the Fund ha d approximately 581 active participa nts and 376 annuitants. J oint Pretrial Statement [Dkt. # 24] at 1-2. 2. T h e P re s i d en t o f NAL C serves a s Plan Administ rator f or the ATF . Pls.’ Ex . 56 at P 424; Pls.’ Ex . 57 at P 74. The Board of Trustee s of NAL C has oversig ht responsibiliti es for the

un ion , the AT F , the NA L C Hea lth B e ne fi t Pr og ra m, a nd the NA L C L if

e I ns ur anc e Pr og ra

m. Pls.’ Ex . 55 at 41. Ther e ar e thre e trustee s on the Boa rd of Tr ustees, wh o are elec ted by union members. The union also is g overne d by a 28-member Executive Council, consisting of the thre e trustee s, national offic ers a nd national business ag ents. Pls.’ Ex . 55 at 42. 3. I t is undisputed that the plan docume nt which g overns the A TF a llows the Boa rd of Tr ustees to adopt amendments to the plan but a ny proposed amendment must first be e valuated by the ATF ’s ac tuaries a

nd, afte r adoption by

the B oard of Trustee s, must then be approve d by the NAL C Ex ecutive Counc il. Pl s.’ Ex. 1 at P 92.-3-

A. The Sur viv or Ann uit y P r ov ide d by t he AT F 1. One of

the bene fits offer ed by

the ATF is a bene fit to a

surviving spouse equal to 60% of the participa nt’s acc rued be nefit. Pls.’ Ex . 1 at P 87. 2. The pa

rties ag ree that under the ATF in effe ct at l ea s t until M ay 15, 1985, the surviving sp ou se wa s th e “ on e to wh om the Annu ita nt wa s marr ie d fo r a

t le a st o ne y e ar i mme diate ly prec eding the Annuitant’s dea th, or i s the pare nt of issue by such marr iag e.” Pls.’ Ex. 1 at P 87. This is termed the “one- y ear -at-de ath” r ule. 3. Al tho ug h th e y

dis pu te the le g a lity

of the c ha ng e , th e pa

rt ie s d o n ot d isp ute that a t so me tim e be tw e e n 1985 and

19 89 , th e AT F wa s c ha ng e d to pr ov ide fo r d if fe re nt e lig ibi lity

re qu ir e me nts . A rt ic le V, Se c tio n 1 (b ) o f t he F un d n owstate s: Up on de a th of an Ann

uit ant, the surv ivi ngsp ou se (i f a ny ) i s e lig ibl e fo r a

n A nnuit y of 60 % of the Annu ity

be ingpa id t o the Annu ita

nt a t the tim e of de a th, pr ov ide d th a t th e sp ou se is o n e to w h o m t

h e A n n u it an t w a s ma

r r ie d f o r a t l e a s t the y ear immediately

prec eding and endingon the Annuitant’s annuity commencem ent date, or is the pare nt of issue by such marr iag e. Notwithstanding the foreg oing, if the Annuitant and the spouse w ere marrie d within the y ear befor e the a

nnuity co m m ence ment date a nd wer e mar

ried for at least one y ear en d i ng on or bef ore the Annuitant’s de a th, that

sp ou se sh a ll b e pa id t

he Sur viv or Annu ity a s if the s pouse and the Annuitant had bee n marrie d for the y ear ending on the annuity

commence ment date. Pls.’ Ex . 16 at NAL C 34. This pr ovision is termed the “mar riag e-at-commenc ement” r ule. 4. Since the Ove rby s marrie d four month s af t er Mr . Over

by commence d rec eiving an ATF

annuit y , M rs . O ve rb y

wo uld be e lig ibl e fo r a

surv ivo r’ s b e ne fi t on ly

un de r t he “ on e -y e a r- a tdeath” rule, whic h the Def endants insist has not been in ef fec t since 1985.-4-

B. T he Ove r bys and t he De nia l of Sur viv or Be ne fit s t o M r s. Ove r by 1. Halline Ove rby

was born in 1920 a

nd beca me a letter

car rier in 1960. Tr. I , 14-15. He was elec ted pre sident of his local union in 1969 and was elec ted to NAL C’s Boa rd of Tr ustees in 1978. Tr. I , 16-17. Mr. Overby serve d as a trustee until 1981 and wa s Chairman of the Boa rd of Tr ustees in his final y ear . J oint Pretrial Statement at 33 (Stipulations), ¶ 1. 2. I n April 1981, M r. Ov erby was a ppointed Assistant Secreta ry -Tre asure r of NA L C, was

e le c te d to that off

ic e in 198 2, and c on tin

ue d in th a t c a

pa c ity un til 19 90 . T r. I , 1 9- 20 . A s a national offic er, Mr . Over by worke d at NAL C he adquar ters in Washing ton, D.C., from 1982 until 1990. Tr. I , 20. First as a trustee a nd then as a

national offic er, Mr . Over by serve d on the NA L C Exe c uti ve Counc il fr om 197 8 to 1990

. Tr . I , 48. F ir st as a tr us te e and the n a s a national offic er, Mr . Over by was a participa nt in the ATF from 1978 until his retire ment. Tr. I , 18-19. 3. The Ove rby s met in 1980 and beg an to l i v e t o g ether in 1982. Tr. I , 84-85. Mrs. Ove rby be g a n w or

kin g fo r the NA L C H e a lthPlan in Oc tob e r 1 98 2 a

nd re ma ins in t

hat po sit ion

to this day ; as such, she is a pa rticipant in the ATF . Tr. I , 84. The Over by s wer e mar

ried on May 30, 1991, almost four months after Mr. Over by ’s re tirement. Tr. I , 85-86. 4. On May

1,1986, Mr. Over

by suffe red a stroke. Tr. I , 85. Although he achie ved a substantial

r e c o v e r y t h r o u g h t h e r a

p y , h e c o n t i n u e d

t o h a v e p r o b l e m s w i t h s p e e c h an d m o b i l i t y . T r . I, 22-23. As a result, Mr. Over by did not seek r e-e lection to his positi on as Assistant Secre tary Trea surer in 1990 and his term of off ice e nded in Dec ember

of that y ear . Tr. I , 23, 86. 5. As an ATF annuitant, Mr. Ove rby rec eives a

monthly b en ef

i t of $2,936. Pls.’ Ex . 20. Pa y me n t o f th is b e n e f

it c o mm e n c e d

o n F e b r u ar y 1 , 1 9 9 1 , w h e nh e w a s a g e 7 0 1 /2

. Pl s . ’ E x.-5-

20 . A s o f D e c e mbe r 1 98 0, wh e n th e annuit y fo r hi s su rvi vin g sp ou se wa s c a lc ulate d, it would be $1,762 per

month. Pl s.’ Ex. 20 at P 26. 6. B e fo re he le ft

L os An g e le s in

19 81 , M r. Ov e rb y

ha d s e pa ra te d f ro m hi s f ir st wi fe , L

uc ill e Ov erby

. Tr. I , 2 0- 21 . B oth pa rt ie s to that f

ir st m arr ia g e ini tiate d d ivo rc e pr oc e e din g s in 1990, Mr. Over

by i n Virg inia and L

ucille Over

by in California. De fs.’ Exs. 105a & 107. Th e Vi rg ini a

div or c e be c a me fi na l in

Au g us t 19 90 . D e fs.’ Ex

. 10 5e. Un de r a pr op e rt y settlement signe d on J anuar y 6, 1992, eac h party

to the first marr iag e re tained all employ ee be ne fi ts, inc lud ingre te nti on by Mr . O ve rb y of hi s A TF annuit y be ne fi ts, a lth ou g h L

uc ill e Over by rec eived a

portion of Mr. Ove rby ’s re tirement and sur vivor bene fits from the Postal Service /Civi l Service Retire ment Sy stem. Ex

. 107b; Tr. I , 27-29. The pa rties have stipulated that when Mr. O verby was working out his property settlement with Lucille Over by in 1991, his un de rs tand in g o f the s ur viv or annuit y ru le un de r t

he AT F wa s th a t th e “ on e -y e a r- a tdeath” rule wa s still in effe ct. Tr. I , 30-32; Tr. I I , 120-121. 7. Mr. Over

by beca me ill ag ain in the late 1990s a nd Mrs. Over

by beca me conc erne d for he r own financ ial stability

. Tr. I , 90-91. She spoke to NAL C President Bill Young in both 1998 and 2002 about c heckingthe document s t o ensure that the cha ng e in bene ficiar ies from Lucille Over

by to her ha d been r ecor ded. Tr. I , 90-91. 8. I n Fe b ruar

y 2003, Mrs. Over

by inquired about the life insurance benef iciary desig nation ag ain while at the N AL C acc ountin g o ff ice. Misunder standing the question, a senior

a c c ount a n t r e sp on de d th a t Mr s. Ov e rb y wa s n ot e lig ibl e to r e c e ive an A TF surv ivo r’ s b e ne fi t. Tr. I , 9 1

. T h is a d v ic e w a s c o n f ir me d b y te le p h o n e th e n e xt d ay an d w a s b a s e d o n th e fac t that th e Ov e rb y s w e re no t ma rr ie d w he n M r. Ov e rb y be g an re c e ivi ng his annuit y pa y me nts
.-6-

Tr. I , 91-92. 9. Whe n Mr s. Ov e rb y c a lle d the of fi c e of un ion pr e sid e nt B ill Yo un g , sh e wa s a ssu re d b y his assistant that Mrs. Over

by was e ligible f

or the survivor annuity . Tr. I , 92. Howeve r, by letter dated F ebrua

ry 7, 2003, to Mr. Over

by , Mr. Youngstated that Mrs. Ove rby is not eligible f

or the survivor a

nnuity benef it because their mar ri age “occ urre d afte r y ou commence d y our retire ment.” P ls.’ Ex

. 30 at NAL C 111. The letter included a memorandum from Richard L a F oll e tte , a ssi sta

nt a dmi nis tr a tor

of the AT F , c iti ngthe “ marr ia g e -a t- c omm e nc e me nt” ru le and advising that “[t] he most important asp ec t o f this rule is that the annuitant must be marrie d on the day

the annuity

commence s,” and that Mrs. Over by was inelig ible under the rule beca use she mar

ried Mr. O verby

“at lea st three months afte r his commence ment date.” Pls.’ Ex . 30 at NAL C 112. Mr. Young further advised th at h e wo u l d chec k with leg al counsel “ to determine if the re is any flexibi lity in this regulation” and would c all “once [he]

rec eive[d] t hat leg al advice .” Pls.’ Ex . 30 at NAL C 111. 10. Mr. Youngthen met with the Over by s and said that he ha d not even known tha t the “mar riag e-at-commenc ement” r ule exist ed until the Over by s called him. Tr. I , 44, 94. 11. Mr. Younghad re p l ac ed Vincent Sombrotto as NAL C’s president a nd ATF plan

a dmi nis tr a tor in D e c e mbe r 2 00 2. Tr . I I I , 7 -8 . M r. Ov e rb y ne xt co nta c te d M r. Som

br ott o to inq uir e a bo ut t he c ha ng e in r ule s. Tr . I , 4 4- 45

. Mr . Ove rb y re po rt s th a t Mr . So mbr ott o s a id that he had a dopted the ame ndment in his c apac ity as plan administrator. Tr. I , 44-46. At his de po sit ion , M r. Som

br ott o denie d th e state me nt a nd state d th a t “ the e xec uti ve c ounc il decide d” to make the chang e. Pls.’ Ex . 52 (Sombrotto Dep.) at 44-45. 12. By

letter dated Marc h 29, 2003, Mr. Over by reque sted a re view of the denial of survivor’ s-7-

benef its to Mrs. Overby . Pls.’ Ex . 31. 1 3

. T h e B o ar d o f T r

u s te e s d e n ie d M r . O v e r

b y ’ s a p p e a l a t a me e ti n g o n A p r il 2 3 , 2 0 0 3

. Pl s . ’ E x. 32. As Mr. Youngadvised Mr. Overby by letter dated May

7, 2003, “[b] eca

use y ou wer e

marr ie d to y our curr e nt spo us e a ft e r y our annu ity c omm e nc e me nt da te , y our c ur re nt s po us e is not entitl ed to survivor be nefits under the Plan.” Pls.’ Ex . 33 at P 6. 14. There afte r, Mr. Ove rby contac ted former trustees from the re levant time, i.e. , G e or g e Da vis , J ames Souza, and J ames W orsham, and five former membe rs of the Executive Council, i.e. , J ohn Marc o, L awr ence Hutchins, Robert Buntz , Paul C. Davis, and Euge ne McN ulty . Pls.’ E x . 34. Eac h of them subseque ntly wrote to Mr. O verby

aff irming that they

had no

rec ollection of an a

mendment to the surviving spouse rule pr esente d to the trustees at an ATF meeting on April 19, 1985, as asse rted by the Fund, or a vote by the Ex ecutive Counc il on any such ame ndment on May 15-16, 1985. Pls.’ Ex . 34. 15. Throug h counsel, on F ebrua ry 8, 2006, Mr. Overby reque sted rec onsideration of the denial of bene fits to Mrs. Ov erby , based on the se letters. Pls.’ Ex. 65. The rec ord is barr en of evidenc e that the plan administrator or curr ent trustees e ver inve stigated furthe r. President Young testified that he never saw the letters until af ter depositions in this c ase in May and J une of 2007. Tr . I I I , 50-51, 70-71. 16. This lawsuit was filed in August 2006. C. The Ado pt ion of a C hang e d AT F Sur viv or Be ne fit 1. Ar tic le I X, Se c tio n 1 of

the AT F – e nti tle d “ Autho ri ty to A me nd ” – p ro vid e s: The provisions of the Plan may be ame nded at any time by the B oard of Trustee s provided that the Tr ustees s h al l submit such propose d amendments to the Fund’ s Actuar y for an eva luation and estimate of-8- its cost, and adoption of amendments by the Trustee s shall be subject to t he a pp ro va l of

the Exe c uti ve Counc il o f t he NA L C. Pls.’ Ex . 1 at P 92. 2. Ar

tic le I X, Se c tio n 2 of

the AT F – e nti tle d “ Pr oh ibi te d A me ndme nts ” – p ro vid e s: No amendment shall be adopted that operates to reduc e the ve sted ri g hts of any Part ic ipa nt, fo rm e r P art ic ipa

nt, or Annu ita nt. Pls.’ Ex . 1 at P 92. 3. De fe nd ants a sse rt

that th e B oa

rd of Tr us te e s “a do pte d” a

c ha ng e to t he AT F surv ivo r b e ne fi t at their mee ting on Apr il 19, 1985. The minutes of that meetin g i n d i ca t e that the trustees

were a dv ise d th a t a

c ha ng e wa s “ re qu ir e d” by

the Re tir e me nt E qu ity

Ac t ( “ REA ” ) t o maintain the plan’s qua lified status. Pls.’ Ex . 8 at P 325. 4. Ms. Jani Ra c he lso n s e rv e d a s o uts ide c ouns e l to the AT F in 19 85

. Tr . I I, 9 6- 97 . A s c ouns e l, sh e a tte nd e d the A pri l 19 , 1 98 5 tr us te e s’ me e tin g and

too k n ote s. Tr . I I , 1 02 -0 3. Ms. Rache lson testified that the REA only require d the addition of a su rv i v o r’ s annuity for a sp ou se marr ie d at th e ti me of ret ir e me nt a nd did no t r e qu ir e a

pla n to su btr a c t e lig ibi lity based on the one-y ear -at-de ath rule. Tr . I I , 122-25. Ms. Rachelson fur ther testified that she did no t r e c a ll a

ny c on sid e ratio n o f w he the r e lim inatio n o f t he on e -y e ar- a t- de a th ru le wo uld violate the prote ction of ac crue d benef its afforde d by

ERI SA. Tr. I I , 154-155, 157. Nor could she re call a n y co nsideration of the ATF ’s provision prohibiting amendments “that operate[] to reduc e the ve sted rig hts of any Pa rt i cipant, former Participa nt, or Annuitant.” Tr. I I , 154; Pls .’ Ex. 1 at P 92. 5. Ms. Rachelson testified that she co u l d not rec all whether an ac tuarial e valuation of the pr op os e d ame ndme nt t o t

h e s u r v i vo r a nnuit y ru le oc c ur

re d b e fo re the Ap ri l 19 , 1 98 5 tr us te e s’-9-

meeting . Tr. I I , 153. She furt h er t es t i fi ed that she did not talk to any actua ry about the proposed a

mendment. Tr. I I , 130. 6. Ms. Rachelson testified that the pr oposed ame ndment to the survivor annuity rule wa s not dra f te d u n ti l a f

te r th e A p r il 1 9 , 1 9 8 5 tr

u s te e s ’ me e ti n g an d th a t a dr a f t o f the proposed amendment wa s not distribut ed to the trustee s at that meeting . Tr. I I , 112, 150. 7. J ames Souza, a trustee who attended the April 19, 1985 trustees’ me eting , testified that the proposed amendment to the survivor annuity rule “unequivoca lly ” was “neve r vot ed on and

was ne ver a

pproved.” Tr. I , 127. 8. Th e a me ndme nt to the surv ivo r annuit y ru le wa s no t me nti on e d in tw o le tte rs from Ms. Rache l s o ndra ft eds h o rt l y

af t er t h e A p ri l 1 9 , 1 9 8 5 t ru s t ee s ’ m ee t i n g ad v i s i n g AT F’ s ac tu ar i es

an d th e u n io n ’ s p r e s id e n t, r e s p e c ti v e ly , o f th e a me n d me n ts a d o p te d a t t h a t m e e ti n g . Pl s . ’ E x. 5 ( May 8, 19 85 let ter to t

he Wy a tt Co mpa

ny ) ( “ e nc los inga

dr a ft of the thr e e a me ndme nts

a do pte d at th e [Ap ri l 19 , 1 98 5 tr us te e s’ ] me e tin g . . .” ); Pls. ’ E x. 6 ( Ma y 13 , 198 5 lette r t o NAL C President Sombrotto) (“enc losing a set of t he amendments to the Annuity Trust Fund wh ic h w e re a do pte d a t the [Ap ri l 19 , 19 85 ] T ru ste e s’ me e tin g . . .” ). Ms. Ra c he lso n c ou ld

no t e xpla in w hy

the a me ndme nt to the surv ivo r annuit y ru le wa s n ot i nc lud e d in

tho se le tte rs . Tr. I I , 143, 145-46. 9. The NA L C Ex ecutive Counc il met on May 14-16, 1985 in Washington, D.C. P ls.’ Ex . 10. The minutes of that mee ting pr ovide that “[t] he Council unanimo u s ly approve d a set of

a me ndme nts to t

he NA L C Annun ity

Tr us t F un d. ” Pls. ’ E x. 10 a t N AL C 68 0. De fe nd a nts

asser t t h at t h e Ex ecutive Counc il “approve d” the pr oposed ame ndment to the survivor annuity rule at that meeting

.-10-

10. J ohn Marc o, a member of the Ex ecutive Council in 1985, testified that there was “neve r” a discussion about “any

reduc tion” in survivor’s benefi t s at t hat Executive Council meeting and “ha d there been suc h a proposa l, Iwould have vote d ag ainst it.” Tr. I I , 18-19. 11. J ames Edg emon, a membe r of t h e Ex ecutive Counc il in 1985, testi fied that the Executive Counc il “ [a]b so lut e ly [did ] no t” re vie w the pr op os e d ame ndme nt t o th e surv ivo r a nnuit y ru le at the May

14-16, 1985 mee ting. Tr . I , 162. 12

. L awr e nc e Hutc hin s, a lso a me mbe r o f t

he Exe c uti ve Counc il i n 1 98 5, te sti fi ed th a t he did not rec all voting to ame nd the survivor a nnuity rule at that Ex ecutive Council meeting a nd that “any resolution of this mag nitude that would [a] ffe ct some of the individuals there , there

wer e some who w ere in the proce ss of being divorce d, some who had b ee n divorce d, they would have ha d a kee n interest in it.” Tr. I I , 44. 13. Vincent Sombrotto, then-N AL C Pre sident and Chairman of the Ex ecutive Counc il, testified at a deposition t hat the propose d amendment wa s approve d by the Executive Council. Pls .’ Ex . 52 at 73. II. LEGAL STANDARDS “An individual who is a potential bene ficiar y , reg ardle ss of whethe r he or she become s an actual beneficiar y , has standing to bring an ERI SA suit.” Mu lle r v . Fi rst Un um LifeIn s. Co. , 23 F. Supp. 2d 231, 234 (N.D.N .Y. 1998). Thus, Plaintiffs ha ve standing despite the fa ct that Mr. Over by , the Annuitant, is not dece ased. The parties disag ree as t o which of two standards of revie w under ERI SA should be applied by

the Court. Plaintiffs argue t h at t h e standard of revie w should be de novo . D e fe nd a nts

argue that th e sta

nd ard of re vie w s ho uld

be a bu se of dis c re tio n. Th e Court

fi nd s th at th e pr e c ise-11-

standard of

revie w need not be deter mined beca

use the trustee s’ fa ilure to comply with the Fund’ s formal a mendment proc edure is unlawful under either standa

rd of r eview. See W

agener v . SBC Pension Bene

fit Pla n -Non Bargained Program , 4 07 F .3 d 3 95 , 4 03 (D .C. Cir . 2 00 5) (d e c lin ingto decide which standard of revie w to a pply to a committee’s employ ee benef it plan interpretation that

“ f a i l s w h e t h e r

w e a p p l y de novo revie w or a defe rential standa

rd of r eview” ). “[ E ]ven under a defe rential standa

rd of r eview, Plan fiduciaries cannot claim defe renc e for an interpr etation of the Plan . . . that contradic ts the Plan’s plain lang uag e.” Id. at 405. III . A NA LY SIS ERI SA Section 402(b)(3) require s that ever y employ ee be nefit plan “p ro v ide a proce dure f

or ame nding suc h plan, and f or i dentifying the persons who have authority to amend the plan.” 29 U.S.C. § 1102(b)( 3). “[T]he literal t erms of § 402(b)( 3) are ult imately indiffer ent t o the level of de tail in an amendment pr oced u re, or in an identification procedur e for that matter.” Curtis s-W right Cor p. v. Schoone

jongen , 514 U.S. 73, 80 (1995). “The provision require s only that there be an amendment proce dure, w hich her e ther e is.” Id. (empha sis in original). “ A ‘proc edure ,’ as tha t te r

m is c o mm o n ly u n d e r s to o d , is a ‘ p arti c u la r w ay ’ o f d o in g s o me th in g , o r a ‘ ma nner of proce eding .’” Id. (citations omitted). “Requiringever y plan to h av e a coher ent amendme nt proce dure se rves se vera l laudable goa ls[ ,]” including “incre as[ing] the l ikelihood that proposed plan amendments, whic h are fairly serious eve nts, are r ecog ni z ed as such a nd g iven the spec ial consideration they

deser ve.” Id. at 82. ERI SA “follows s tandar d trust law principles in dictating only that whateve r leve l of sp e c if ic ity a c omp any ult imate ly c ho os e s, in an a me ndme nt pr oc e dure or e lse wh e re , it

is b ound to that level.” Id. a t 85 . “ An e mpl oy e r m ay , o f c ours e , r e ta in t he un fe tte re d rig ht to alt e r its p ro mis e s,-12-

but to do so it must follow the for mal proce dures se t forth in the plan.” Inter-M odal Rail Employees A s s ’n v. Atc hison, Topeka & Santa Fe Ry. Co. , 520 U.S. 510, 515-16 (1997). A ccor dingly , a proposed amendment not done in accorda nce with a plan’s amendment procedur e is ineffe ctive and does not amend a plan. See id. at 516 (“ the ‘c og nizable claim [under ERI SA] is that the company d i d n o t[ am en d i t s we l fa re b en ef i tp l an ] i na p er m i s s i b l e m an n er ’” ) ( qu o t i n g Curtis s-W right Cor p. , 51 4 U .S. a t 78 ) ( a lte ratio ns in o ri g ina l) ; se e als o De pe nb ro c k v . Ci gn a Co rp ., 389 F.3d 78, 82 ( 3d Cir . 2 00 4) (“ an ame ndme nt is ine ff e c tiv e if it is in c on sis te nt w iththe g ov e rn ingins tr ume nts ” ); Shaw

v. C o n n . Ge n . Life Ins. Co. , 353 F.3d 1276, 1283 ( 11th Cir. 2003) (“Ha ving c reated a pa

rticular pr oc e dure , it

se e ms evid e nt t o u s th a t th e pa rt ie s . . . mus t f

oll owthat pr oc e dure in o rd e r t o c re a te

e nf or c e a ble a me ndme nts ” ); Coleman v. Nationwide Li fe Ins. Co. , 969 F.2d 54, 58-59 (4th Cir. 1992) (“a ny modification to a plan must be implemented i n co nformity with the formal amendment pr oc e dure s[;] in fo rm a l wr itt e n mod if ic a tio ns to a pla

n . . . are of

no e ff e c t” ); Mi lle r v . Co as tal

Cor p ., 978 F.2d 622, 624 ( 10th Cir. 1992) (“An e mploy ee be nefit plan c annot be modified . . . by informal

c omm un ic a tio ns , r e g ard le ss o f w he the r t ho se c omm

un ic a tio ns are or a l or

wr itt e n, [be c a

us e ] ERI SA require s all modifications to an employ ee benef it plan to . . . conform to the for mal amendment proce dures” ) (c itations omi tted).

The ATF ’s forma l amendment proce dure provides for thre e conjunc tive conditions pr e c e de nt t o a

va lid a me ndme nt: (1) The trustees must first submit the proposed amendme nt to the Fund’ s actua ries

“ fo r a n e va luatio n a

nd e sti ma te of

its c os t;” (2) The trustees must then “a dopt” the propose d amendment; and (3 ) N AL C’ s E xec uti ve Counc il mus t th e n “ a pp ro ve ” the pr op os e d ame ndme nt.-13-

Pls. ’ Ex. 1 a t P 92 . The pr op os e d ame ndme nt w a s to su bs tit ute the “ marr ia g e -at- c omm e nc e me nt” rule re quired by

the REA for the “one- y ear -at-de ath” r ule, so that the forme r rule w ould replac e and

su pe rs e de the la tte r r

ule . T hu s, in or de r to ha ve le g a l ef fe c t, the pr op os e d sub sti tut ion of ru le s mu st have be en (1) submitt ed to the F und’s ac tuaries “ for a n evaluat i o n an d es t i m ate of its cost,” (2)

“ a do pte d” by

the tr us te e s, and

(3 ) “ a pp ro ve d” by

the Exe c uti ve Counc il. The r e is n o e v id e n c e in

th e r e c o r d

th a t t h e tr u s te e s e v e r

s u b mi tt e d th e p r oposed substitut ion of rules to the Fund’ s actua ries bef ore the y asser tedly “adopte d” it, as the fir st step of the ATF ’s amendme nt pr ocedur e require s. The entirety of the rele vant portion of the minutes of the April 19, 1985 trustees’ meeting , at which De fenda n t s as s er t the proposed a mendment was

“ a do pte d, ” state a s f

oll ow s: I t was no te d th a t A rt ic le V, Se c tio n 1 (b ) o f t he Plan c ur

re ntl y provides that the spouse’ s survivor annuity is pay able upon the Annuitant’s death to the spouse at the time of death, while under REA t h e annuity

must be pay able to the spouse w ho was mar ried to the Annuitant for the y ear

prior to the annuit y s t ar t i n g date. I f the marria g e took place within the y ear befor e the a

nnuity starting date, howe v er , REA provides for pay ment to that spouse, provided the spouse an d

th e A n n u it an t w e r e ma

r r ie d a t l e a s t o n e y e ar

b e f o r e the Annuitant’s death. Accor dingly , a m otion was approve d amending the Plan to delete the c urre nt one y ear befor e death rule and to re place it with the REA one y ear befor e annuity commence ment rule, subjec t to the exception noted above f or marr iag es within that y ear . Pls.’ Ex

. 8 at P 325, ¶

7.a. The minutes make no re fer ence to an ac tuarial e valuation or e stimation

occur ring at that meeting with respec t to the proposed substitution of rules. The omission of such

an ac tuarial e valuation and e stimation i s telling when jux taposed ag ainst the next subpara g raph of those same mi nutes, in which it is rec orded that before the trustees a dopted a survivor ’s bene fit for spouses of ter

minated vested employ ees, a s the REA also purporte dly require d, “[t] he Ac tuaries-14-

advised that the cost of providing t he maximum survivor bene fit to the terminated ve sted Employ ee, i.e. 60% c ommencing immediately , is estimated at
. 1 % o f p ay roll.” Id. a t P 3 26 , ¶

7. b. I t a lso is telling that the minutes of the Dec ember 5, 1985 trustees’ me eting specific ally mention that the F un d’ s a c tua

ri e s und e rt oo k a

n a c tua ri a l e va luatio n at th a t me e tin g , th ou g h n ot o f t he “ marr ia g e -atcommence ment” rule

. See Pls.’ Ex . 12 at NA L C 7 0 1 , ¶ 6. Given that when these actua rial evaluations occurr ed at tr u stees’ me eting s they wer e re flec ted in the minutes, the omission of any

re fe re nc e in t

he min ute s to an ac tua

ri a l eva luatio n with re sp e c t to th e “ marr ia g e -at- c omm e nc e me nt”

ru le is s tr on g e vid e nc e tha t on e ne ve r o c c ur

re d. Th is i s e sp e c ia lly

so c on sid e ri ngthat D e fe nd a nts rely on those same mi nutes as evidence that the trustees “a dopted” the pr oposed ame ndment. See Def s.’ Proposed F indings of F act ¶ 17. That no ac t u arial evaluation or e stimation ever occ urre d with respec t to the “mar riag e-at-commenc ement” r ule prior to its asserte d “adoption” is fur ther e stablished by

the testimony adduce d at trial. Ms. Rache lson, outside counsel to the Fund at the time a nd the per son who prepa

red the minutes of the April 19, 1985 trustees’ meeting , testified that “[t] he mi nutes

acc urate ly

ref lect what h ap p en ed” a

nd that she did not “know how w e would dete rmine what h a p p e n e d an y o t h e r

w ay. ” T r . II , 1 6 2

. S h e f u rt h e r t e s t i f i e d t h a tt h e a c tu ar i e s w e r e “ a b s o l u t e l y” prese nt at the April 19, 1985 trustee s ’ meeting and that they “absolutely” par

ticipated in that meeting . Tr. I I , 164. Howeve r, whe n asked a bout whether

the ac tuaries ha d been c onsulted about the proposed a ddition of the “marr iag e-at-c o mm e nceme nt” rule, she testified that she ha d not “talked to any actua ry about this subject” (Tr . I I , 130) and that s h e h ad “n o curr ent re collection” a bout whether the proposed a

mendment was submitt ed to the Fund’s actua ries. Tr. I I ,153. Her

notes of the Ap ri l 19 , 1 98 5 tr

us te e s’ me e tin g , li ke the min ute s o f t hat me e tin g , r e fl e c t th a t th e “ marr ia g e -at-Def endants wa ived an e stoppel defe nse by failing to plead it. Estoppel is an aff irmative 2 de fe ns e that “ mus t [be ] af fi rm a tiv e ly

state [d].” F e d. R. C iv. P. 8 (c )( 1) . D e fe nd ants fa ile d to aff irmatively

state estoppel in their A nswer. See Dkt. # 3. “[F]ailure to plead a n aff irmative defe nse g ener ally

waives the defe nse.” Cam ali e r &Bu c k le y -M ad iso n, In c . v . M

ad iso n H ote l, Inc. , 513 F.2d 407, 420 n.92 ( D.C. Cir. 1975). -15- commence ment rule” was discussed but omit any ref ere nce to a

n actua rial eva luation or estimation having occur

red w ith respec t to that rule. See Pls.’ Ex . 4 at NAL C 634. Def endants have not pointed to, a nd the Court c annot find, any evidenc e in the re cord showing that the proposed a mendment was submitted to the Fund’ s actua ries for an eva luation and estimation prior to its purpor ted “adoption” by the trustees. I nstead, De fenda nts arg ue that (1) the trustees c ured a

ny proce dural de ficienc ies by subs eq u entl y

ratify ing the minutes of the April 19, 1985 trustees’ me eting , and (2) Plaintiffs are e stopped from c lai m i n g that proce dural de ficienc ies nullified the proposed a

mendment bec ause Mr . Over by asser tedly voted to a dopt it as a member of NAL C’s Ex ecutive Counc il in 1985. Both a rg uments miss t he mar

k, howeve r, bec ause ne ither the 2 Boa rd of Trustees’ asserted “adoption” nor the Ex ecutive Council’s asser ted “approval” could cur e the abse nce of

an ac tuarial e valuation and estimation. I t is axiom atic that a deficienc y can only be

c ur e d b y the pe rs on (s ) w ho have the po we r t o c ur e , a nd he re tho se pe rs on s w e re the a c tua ri e s. Ac c or din g ly , th e Court

fi nd s th a t D e fe nd ants fa ile d to c omp ly wi th at le a st the fi rs t ste p o f t he AT F ’s a me ndme nt p ro c e dure , a nd c on c lud e s th a t th e AT F wa s n e ve r l e g a lly a me nd e d to substitut e the “ marria g e-at-commenc ement” r ule for the “one- y ear -at-de ath” r ule. Ther ef

o re, the Court need not dec ide whethe r the proposed amendment was proper ly “adopte d” by the trustees a

nd “appr oved” by NAL C’s Ex ecutive Council, nor whether it violates any

other provision of ERI SA.-16- IV . C ON CL USI ON For the fore g oing r easons, judg ment is entere d in fa v o r o f Pl a in ti f f s . A me morializi ng Orde r ac companies this Memora ndum Opinion.

DA TE : F e br

ua ry 27 , 20 09 /s/ ROSEMARY M. COL L YER Un i t edS t at es Di s t ri ct J u d ge