actuary, Mr. Alex Selwood, as well as the Board of Trustees’ counsel, Mr. Barry G. Collins. (DF
Exhibit A-18). The 30-and-Out Pension became available for participants age fifty (50) and
older with thirty (30) years of contributed service with the 703 Plan. (DF Exhibit A-18). In
1994, the Trustees concluded that Plan assets and funding allowed for additional enhancements
to the 30-and-Out Pension benefit. (DF Rule 56.1 Statement 7 48). Ata March 24, 1998
meeting, the Trustees discussed allowing reciprocal service credits in determining eligibility for
30-and-Out Pensions. (Murdoch Affidavit 29-31). The Fund’s actuary, however, advised the
Trustees that it was impossible to compute the actuarial costs of doing this because of the lack of
information on the number of former participants who might qualify. (DF Rule 56.1 Statement
62).. The actuary did suggest that financial exposure could be limited by setting conditions for
the reciprocal service credits in determining eligibility for a 30-and- Out Pension. (DF Rule 56.1
Statement | 62; Murdoch Affidavit § 30). The Trustees then amended the 703 Plan, effective
January 1, 1998, to recognize reciprocal service credit for the 30-and-Out Pension benefit if i) at
least fifteen (15) years of service credits out the last thirty (30) were as a covered employee under
the 703 Plan, and ii) six (6) out of the last ten (10) years of service were as a covered employee
under the plan. (DF Rule 56.1 Statement § 66; Murdoch Affidavit § 31; DF Exhibit A-25).

As noted above, the Trustees consulted with their actuarial services throughout the years
that the 30-and-Out Pension evolved in its various forms. They engaged in discussion about the
propriety and financial soundness of liberalizing the 30-and-Out Pension benefit. The Trustees
had an obligation to. maintain the actuarial soundness of the 703 Fund, and as such, cannot carte
blanche distribute benefits to persons who are not eligible for them. See ERISA § 406(a)(1)(D),

29 U.S.C.A, 1104(a)(1)(D) (outlining fiduciary duties in ERISA). Here, the Trustees based their

13



Beginning in 1987, the 703 Fund began providing a subsidized benefit known as a “30-
year pension.” This was a new benefit that was more favorable than the normal retirement
benefit for retirees. However, in creating the 30-year pension, the Trustees determined that
Appendix A rules regarding the recognition of reciprocal service credits under the Reciprocal
Agreement would not apply to the 30-year pension, while the aforementioned Appendix A rules
would continue to apply to the Normal, Early, Disability, and Deferred Vested Pensions. (DF
Rule 56.1 Statement, 36; Murdoch Affidavit Exhibit 17). In the ensuing years, the Trustees
made a seties of similar benefit additions, including a “35 year pension” (which replaced the 30
year pension), “25 and Out pension” and “30 year and Out pension” (DF Rule 56.1 Statement, 4
37-51). In each of these new benefits, the Trustees determined that reciprocal service would not
qualify towards earning a 30-year pension, a 25-and-Out pension, a 30-and-Out pension, etc.
Rather, eligibility for these types of retirement benefits were restricted to employees with service
specifically with employers during which the employer contributed to the 703 Fund.

On November 29, 1989, the Trustees adopted the “30-and-Out Pension” (the type of
pension at issue before the court in this case), effective January 1, 1990, which provided a benefit

payable as early as age 50 rather than age 60 (for the Normal Pension) or age 55 (for the Early

"(DF Rule 56.1 Statement, 37). The 30-and-Out pension required participants to have
thirty (30) or more years of contributed service with the 703 Plan, with at least % year of Pension
Service earned after January 1, 1989; further, the 30-and-Out Pension required that the
participant’s thirty years of service be continuous. “Continuous” means that the service not be
interrupted by a break of two or more years. (DF Rule 56.1 Statement, 37). Notably, the 30-

and-Out pension did. not count reciprocal service toward eligibility requirements.



defined early retirement benefits as the retirement benefits that would begin at normal retirement
age, actuarially reduced to reflect its commencement at an earlier date.” Arena v. ABB Power
T&D Co., 2004 U.S. Dist. LEXIS 6522 (D.Ind., 2004). See, e.g. Heinz v. Central Laborer’s
Pension Fund, 303 F.3d 802, 810 (7th Cir. 2002); Bellas v. CBS, Inc., 221 F.3d 51, 538 (3d Cir,
2000).

“Retirement-type subsidy", however, has been more elusive. "The statute refers to a
subsidy ‘as defined in the regulations.' Unfortunately there is no regulation which defines the
term. We are on our own." Arndt v. Sec. Bank S.S.B. Employees’ Pension Plan, 182 F.3d 538,
542 (7th Cir. 1999). The Senate Report in the Retirement Equity Act (REA) did, however,
define benefit subsidy as, "The excess of the value of a benefit over the actuarial equivalent of
the normal retirement benefit." S. Rep. No. 98-575, at 28 (1984). Consistent with the Senate
Report, several courts have defined a retirement-type subsidy as the excess value over the
actuarial equivalent of the normal retirement benefit. See, e.g., Bellas, 221 F.3d at 533;
Costantino v. TRW, Inc., 13 F.3d 969, 977-78 (6th Cir. 1994).

The Court finds that 30-and-Out Pension at issue is a retirement-type subsidy. Although
case law addressing retirement-type subsidies is sparse, Ashenbaugh, 854 F.2d 1515, addressed a
challenge to a company’s denial of a “30-year Benefit” to employees who failed to meet a thirty-
year service requirement. /d. at 1519-20. Like the benefit at issue in Ashenbaugh, the 30-and-
Out Pension in the present case “included amounts over the actuarial equivalent of a normal
retirement benefit and thus was a subsidy.” Helms, 1999 WL 96520, at 7. (N.D.ll.); (DF Rule

56.1 Statement, ff] 108-110, 112). As such, and coupled with the contents of the Peick letter, the



Rule 56.1 Statement | 81). However, during the 1989-1999 period, Zajac did earn 10.7 credits
(by working for employers who contributed to the Suburban Plan, a party to the Reciprocal
Agreement) for the purposes of Reciprocal Service. (DF Rule 56.1 Statement { 83, 91). The
703 Fund rejected Plaintiff s application for a 30-and-Out Pension on December 15, 1999, and
wrote him a letter, dated January 12, 2000, informing him that he was ineligible because he did
not meet the requirement that six out of the last ten years of his service be earned with employers
contributing to the 703 Plan. (DF Rule 56.1 Statement 4 92-93; DF Exhibit A-30). The letter
notified Plaintiff of his right to appeal within 60 days of the letter, as well as his right to be
represented by counsel (without cost to the Fund), and to “review pertinent plan documents and
to submit issues and comments in writing.” (DF Exhibit A-29). Plaintiff appealed this decision
in April 2000, and the Trustees, after considering the appeal, notified the Plaintiff's attorney by
letter on June 1, 2000 that the appeal had been denied for the same failure to meet this
requirement. (DF Rule 56.1 Statement 494-95, DF Exhibit A-30 ).
DISCUSSION

1 Standard for Summary Judgment

~ A party is entitled to Summary Judgment “if the pleadings, depositions, answers to
interrogatories, and admissions of fact, together with affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to judgment as a matter
of law.” Fed. R. Civ. P. 56(c). The moving party for summary judgment bears the initial burden
of demonstrating an absence of evidence to support the position of the non-moving party. Doe v.
RR, Donnelly & Sons Co., 42 F.3 439, 443 (7th Cir. 1994). In responding to a motion for

stimmiary judgment, the non-moving party must then set forth specific facts showing that there is



. Inthe ensuing years, the Trustees, after reviewing funding requirements, liberalized the
requirements for earning the 30-and-Out Pension by eliminating the age requirement in April
1990. (DF Rule 56.1 Statement, J 39). On March 24, 1998, the Trustees considered the
possibility of extending reciprocal service to 30-and-Out pensions, but determined restrictive
conditions would be necessary to reduce financial exposure of the 703 Fund. (DF Rule 56.1
Statement, {{] 60-62). The Trustees, however, eventually amended the 30-and-Out pension and
announced the changes in a Notice to Participants of material modifications (dated May 1999) as
follows:

The eligibility rules for a “30 and Out” Pension have been changed. In the past, only the
"years for which employer contributions were received by the Plan were counted towards
your eligibility for a “30 and Out Pension.” Effective January 1, 1998, Reciprocal Service
...£redits may be used to establish eligibility for a “30 and Out” Pension. The new Plan
provision allows participants who accumulate at least 15 years of pension service under

.. this Pension Plan (with at least 6 out of the last 10 years under this Plan) to use up to 15

years of Reciprocal Service Credits in order to establish eligibility for a 30 and Out

Pension. (Exhibit 28 to the Murdoch Affidavit; DF Rule 56.1 Statement {/ 70).

Put more simply, the 703 Plan now recognized reciprocal service credit for the 30-and-
Out Pension benefit if i) at least fifteen (15) years of service credits out the last thirty (30) were
as a covered employee under the 703 Plan, and ii) six (6) out of the last ten (10) years of service
were as a covered employee under the plan. (DF Rule 56.1 Statement {| 66; Murdoch Affidavit 4
31; DF Exhibit A-25).

Plaintiff. worked under covered employment as defined by the 703 Plan from 1973 to
1988, accumulating fifteen years of credit towards a pension with the 703 Plan. (DF Rule 56.1
Statement { 80-81). From 1988 until he applied to the 703 Fund for a 30-and-Out Pension in

November 1999, he had not worked for covered employment as defined by the 703 Plan. (DF

abba ie:



various. Teamster local unions, including Local 703, to encourage them to enter the Reciprocal
Agreement. (DF Rule 56.1 Statement, { 20; DF Exhibit A-5). The Defendant states that this
letter shows that the Reciprocal Agreement was not intended to bind locals (including 703) in
such.a manner that any retirement benefit added in the future (such as the 30-and-Out pension)
had to comply with the Reciprocal Agreement. Rather, the Defendant maintains that the

Reciprocal Agreement only applied to Normal Retirement, Early Retirement, and Disability

Pensions. “(DF Reply Br, at 14). The letter states:

The purpose of the Joint Council Reciprocal Pension Plan is to provide a vehicle
whereby employees who transfer from one pension plan to another within the Joint
Council and who are not able to obtain a regular normal pension would, under certain
circumstances, be able to obtain a reciprocal pension.

You should first note that by participating in the Joint Council Reciprocal Pension
Plan your. ‘board of trustees will continue act as they did in the past, and your own rules or
provisions related to the granting of past service credits, breaks in service, and eligibility
will continue to be applied.

FOR IC

We regard the Joint Council No. 25 Reciprocal Pension as an important milestone
in that it still preserves the authority of the local trustees to establish their own rules while
it credits under certain circumstances time spent in each local for the purpose of obtaining
a reciprocal pension. (DF Exhibit A-5).

Defendant further describes the 30-and-Out Pension as a “retirement-type subsidy.”
“This characterization is important because if true, the [pension] is excluded from full ERISA
protection and the Plan may impose conditions on participants for eligibility.” Helms v. Local
705 International Brotherhood of Teamsters Pension Plan, 1999 WL 96520 (N.D.IIL.). “The

terms. ‘early retirement benefit’ and “retirement-type subsidy" are not defined in the statute or in

the regulations. In the absence of Congressional guidance on the issue, courts generally have



‘#, Minute Order Frm (06/97)

‘United States District Court, Northern District of Illinois

Name of Assigned Judge Sitting Judge if Other
or Magistrate Judge __ Wayne R, Andersen than Assigned Judge
CASE NUMBER 1€ 9330 DATE 9/30/2004
CASE William Zajac vs. Chicago Area LB. of T. et al
TITLE
[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
of the motion being presented.]
(1) a Filed motion of [use listing in “Motion” box above.]
Q) Q Brief in support of motion due
(3) 0 Answer brief to motion due. . Reply to answer brief due
(4) oO Ruling/Hearing on set for at
(5) im Status hearing[held/continued to] [set for/re-set for] on set for at
(©) Oo Pretrial conference[held/continued to] [set for/re-set for] on set for at :
(7) 1 Tyialfsetfor/re-set for]on____at
(8) o [Bench/Jury trial] [Hearing] held/continued to at
(9) oO This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
COFRCP4(m) ClLocal Rule 41.1 CIFRCP41(a)(1) CIFRCP41(a\(2).
ao _ {Other docket entry) Enter MEMORANDUM, OPINION AND ORDER: Motion for summary
judgment [39-1] is granted.
(11) __ [For further detail see order attached to the original minute order.]
No notices required, advised in open court. ~~, Document
No notices required, number of notices
Notices mailed by judge’s staff. aK ont a
Notified counse! by telephone. Sue deewn
vo | Docketing to mail notices.
Mail AO 450 form. ocketifglubbuny initials ‘
Copy to judge/magistrate judge. a b f
courtroom axe muiled notice
TSA deputy’s
initials = -
Datértine received in
[ central Clerk’s Office mailing deputy initials



Paul J. Schneider & Barbara W. Freedman, ERISA: A Comprehensive Guide § 8.03[H] (2d ed.

2003) (discussing post-Firestone developments in the standard of review for benefit denials).

The 703, Plan'was restated most recently on February 1, 2002. (DF Rule 56.1 Statement J
8). Prior to the 2002 restatement, the 703 Plan had been effective January 1, 1989 and further
restated through January 1, 1995. (Murdoch Affidavit { 7). Article 9.01 of the 2002 and 1995
versions of the 703 Plan in relevant part [sic] provide; “The Trustees shall have the responsibility
for the administration of the Plan and the Fund and to.amend or terminate the Plan, in whole or
in part.” (DF Rule 56.1 Statement § 12; DF Exhibits A-2, A-3). Additionally, Article 9.4 of the
1995 and 2002 versions of the 703 Plan in relevant part provides:

The Trustees shall have such duties and powers as may be necessary to discharge

their duties hereunder, including, but not by way of limitation, the following:

(a) to construe and interpret the Plan, decide all questions of eligibility and
_ determine the amount, manner, and time of payment of any benefits hereunder.

(DF Exhibits A-2, A-3).

Based on the above, the proper standard by which to review the Defendant’s actions is the
“arbitrary and capricious” standard. While certain language ensures deferential review, precise
wording is not required. See Herzberger v. Standard Ins. Co., 205 F.3d 327, 331 (7th Cir. 2000)
(noting that "the courts have consistently held that there are no 'magic words' determining the
scope of judicial review of decisions to deny benefits"). However, the Seventh Circuit provides
guidance, See Leipzig v. AIG Life Ins. Co., 362 F.3d 406, 408 (7th Cir. 2004) (quoting the
defendant insuitinee company plan language, “In making any benefits determination under the
Policy, the Company shall have the discretionary authority both to determine your eligibility for

benefits and to construe the terms of the Policy” and concluding, “It is hard to be clearer. This sort

of language leads to deferential judicial review.”).

i



30-and-Out Pension was not one of the benefits to which the terms of the Reciprocal Agreement
and the requirements of ERISA apply.
B. “Lhe 703 Fund’s Denial of the Plaintiffs Request for a 30-and-Out Pension

1. The Arbitrary and Capricious Standard Applies

Even were the Court to hold that the 30-and-Out Pension was not a retirement-type
subsidy, thus activating the protections of ERISA, the Defendant is entitled to summary
judgment in the present case. Under ERISA, the courts review benefit determinations de novo
unless the plan trustees have been given discretion to determine benefit eligibility, in which case
the Court reviews the trustees’ actions under the arbitrary and capricious standard of review.
Trombetta v. Cragin Federal Bank for Savings Employee Stock Ownership Plan, 102 F.3d 1435,
1437 (7th Cir. 1997).

Trombetta is consistent with other cases that followed in the wake of the Supreme
Court’s decision in Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101 (1989). In Firestone,
the Court concluded, “Consistent with established principles of trust law, we hold that a denial of
beneliits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the
benefit plan gives the administrator or fiduciary discretional authority to determine eligibility for
benefits or to construe the terms of the plan.” Firestone, 489 U.S. at 115. See also Militello v.
Central States, Southeast and Southwest Areas Pension Fund, 360 F.3d 681, 685 (7th Cir. 2004);
Hackett ¥. Xerox Corp. Long-Term Disability Income Plan, 315 F.3d 771, 773 (7th Cit. 2003).
Since Firestone, new employee benefit plans have been created (or old ones amended) to include

“appropriate boilerplate language giving plan administrators discretion to interpret the plan.” See

10



a genuine issue of material fact and that the moving party is not entitled to judgment as a matter
of law. Anderson v. Liberty Lobby, 477 U.S. 242, 252 (1986). In analyzing whether summary
judgment should be granted, the Court construes afl facts and draws all reasonable inferences in

the light most favorable to the non-moving party, Bombard v. Fort Wayne Newspapers, Inc., 92

F.3d 560 (7th Cir. 1996).
iL. Issues Narrowed in Light of Defendant’s and Plaintiff’s Briefs

“In the Plaintiffs Response to Defendant 703 Fund’s Motion for Summary Judgment, the
Plaintiff concedes that there are no violations of 28 U.S.C. §§ 1053 (ERISA vesting) or 1054
(ERISA back-loading) present in this case, but that nonetheless, a Federal question remains in
regards to. 29 U.S.C, § 1132(a)(1)(B). Thus, the remaining questions are A) whether Defendant
703.Fund’s requirements for a 30-and-Out Pension violated the Reciprocal Agreement, and B)
whether the 703 Fund’s denial of the 30-and-Out Pension was lawful under ERISA.

A. The 703 Fund’s Requirements for a 30-and-Out Pension

¢ Plaintiff maintains that the 30-and-Out Pension is in fact a type of Early Retirement
Pension and is therefore governed by the terms of the Reciprocal Agreement. (Pl. Br. 6-8). The
Plaintiff argues that in turn, the “six out of ten year” requirement to receive a 30-and-Out Pension
violates the Reciprocal Agreement by delivering a benefit that is less than promised. (PI. Br. 8-9).
The Defendant asserts that the 30-and-Out Pension was not subject to the terms of the Reciprocal
Agreement.

Defendant’s primary evidentiary basis for its position is a 1973 letter from Louis Peick,
the President of Joint Council No. 25 of the International Brotherhood of Teamsters (“Peick

Letter) (DF Rule 56.1 Statement, ff] 19-22; DF Exhibit A-5). The letter was sent as a proposal to



Because it was (and stiil is) common for union members to transfer from one pension
plan to another when members change employers, the 703 Fund and other pension funds
sponsored by various local Teamster unions wanted to prevent union members from losing
service credit when they changed jobs. Service credit is a key means by which a union member’s
eligibility fora particular type of pension is determined. In 1973, the 703 Fund Trustees
executed a Reciprocal Agreement that required the signatory plans to recognize the service,
known as “Reciprocal Service”, of employees that was earned under other plans that were also
signatories to the Reciprocal Agreement. (DF Rule 56.1 Statement, {ff 23-24).

Historically throughout the 1970s and 1980s, the 703 Plan offered four types of pensions:
1) a Normal Pension (a pension benefit for which a participant was eligible at age 60 with five
years of vesting); 2) an Early Pension (a pension benefit payable for participants between 55 and
60 years of age with fifteen years of service); 3) a Disability Pension (a pension payable by virtue
of permanent disability to those participants with 10 years of vested service); and 4) a Deferred
Vested Pension (a non-forfeitable pension benefit payable at normal retirement age to a person
whose employment ended prior to normal retirement age). (DF Rule 56.1 Statement, { 32).
Reciprocal service with other local plans (providing they were parties to the Reciprocal Service)
counted towards an employee’s total length of service for the purpose of determining eligibility
for these four types of pensions. (DF Rule 56.1 Statement, 26). Appendix A of the 703 Plan
provides that when a participant works under another reciprocal plan that is party to the
Reciprocal Agreement, he or she earns credits under that plan and these credits are called

reciprocal credits for the purposes of the 703 Plan. (DF Rule 56.1 Statement, § 30).



decision on relevant factors (the Plan rules, the availability of other pensions for the Plaintiff),
made informed judgments (based on their consultations with their actuaries in setting conditions
for pension eligibility that ensure financial soundness), articulated an explanation (via letters to
the Plaintiff and the appeals process), and reasonably interpreted the plan documents. See
Exobom, 900 F.2d at. 1142-43 (discussing the determination of reasonableness on the part of
pian administrators who deny benefits to a participant). The Court concludes that the Defendant
acted, reasonably in denying the Plaintiff a 30-and-Out Pension.

CONCLUSION

There is no.evidence to support Plaintiff's claim the 703 Fund wrongly denied the
Plaintiffs request for a 30-and-Out Pension. The 30-and-Out Pension’s requirements—
requirements that the Plaintiff failed to meet- did not violate the Reciprocal Agreement or
ERISA. Even under ERISA, the 703 Fund’s denial of benefits to the Plaintiff was not arbitrary
and capricious, and the Defendant acted reasonably in denying the request. For the foregoing
reasons, the Defendant 703 Fund’s Motion for Summary Judgment (#39-1) is granted.

It is so ordered.

Wayne R. Andersen
United States District Judge

owes fpr 30, 0}

14



capricious. standard of review applies. Given this deferential standard, the issue is whether the
Defendant 703 Fund had.a reasonable basis for denying Plaintiffs request for a 30-and-Out
pension. For the reasons set forth below, the Court has concluded that the Defendant’s actions
were not arbitrary and capricious. Therefore, the Defendant’s Motion for Summary Judgment is
granted.
BACKGROUND
“Defendant 703 Fund is a multiple-employer pension fund that provides retirement
benefits for employees who are covered by various collective bargaining agreements (“CBAs”)
between employers and Local 703, an affiliate of the International Brotherhood of Teamsters (DF
Rule 56.1 Statement, § 3). William Zajac (‘Plaintiff’) has been a participant during combined
periods for a total of thirty (30) years in the 703 Fund, as well as the CTDU Fund, and the
Suburban Teamsters of Northern Illinois Welfare and Pension Fund (“Suburban Fund”) (DF Rule
56.1 Statement, J 5).
Benefit costs.are financed by contributions paid by contributing employers to the 703
Fund, as these employers contribute on behalf of their eligible employees, and by income derived
from the 703 Fund’s investments. (DF Rule 56.1 Statement, § 15). The funding levels and
contributions necessary to sustain benefits are subject to “periodic actuarial valuations.” (DF
Rule 56.1 Statement, J 16). Through the years since its adoption in 1959, the Local 703 Pension
Plan has been subject to the terms and conditions of an Agreement and Declaration of Trust
(“Trust Agreement”). This Agreement, among other things, gives the Trustees the power to
administer and supervise the Trust, including the power to construe and interpret the provisions

of the 703 Pension Plan.


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
BE Hy f D
LIAM ZAJAC, ) SEp a.”
) “8 2094
Plaintiff, ) No. 01 C9330
)
v. )
ae ) Judge Wayne R. Andersen
‘AGO AREA IB. OF T. PENSION FUND)
and CHICAGO TRUCK DRIVERS, HELPERS, ) Magistrate Judge Levin
"AND WAREHOUSE WORKERS UNION )
(INDEPENDENT) PENSION FUND, )
)
Defendants. )

MEMORANDUM, OPINION, AND ORDER

. Defendant Chicago Area of I.B. of T. Pension Fund (“703 Fund”) comes before the Court
on its Motion for Summary Judgment on Counts I and II of the Plaintiff William Zajac’s
complaint. Count III of the Plaintiff's complaint is against another Defendant, Chicago Truck
Drivers, Helpers, and Warehouse Workers Union (Independent) Pension Fund and is not
addressed in this Memorandum, Opinion, and Order.

Counts I and II allege violations of the Employee Retirement Income and Security Act
ERISA”). Specifically, Plaintiff alleges that the 703 Fund failed to comply with ERISA
provisions 29 U.S.C. §§ 1053 and 1054, and disregarded the terms of the 703 Fund’s pension
plan by failing to give Plaintiff a “30-and-Out” pension benefit or to credit his service as an
employee as he requested.

In the case at bar, the Court holds that the 30-and-Out Pensions requirements established

by the Defendant did not violate ERISA or the Reciprocal Agreement. Further, the arbitrary and



The language in the 703 Plan is consistent with that in Leipzig. The 703 Plan provision
reserving the Trustees’ power to “construe and interpret the Plan” is unambiguous in its grant of
discretion to the Trustees. Thus, this Court holds that the arbitrary and capricious standard applies

in the present case.

"2. The 703 Fund’s Denial of a 30-and-Out Pension Was Reasonable

Under the arbitrary and capricious standard, the question before the Court is whether the
plan’s decision to deny benefits was reasonable. Hess v. Hartford Life & Accident Insurance
Co., 274 F.3d 456, 461 (7th Cir. 2001). The Court will uphold a plan’s decision if the plan
trustees base their decision on relevant factors, make informed judgments, articulate an
explanation, and reasonably interpret the plan documents. Exobom v. Central States, Southeast
and Southwest Areas Health and Welfare Fund, 900 F.2d 1138, 1142-43 (7th Cir. 1990).

In the present case, the 703 Fund acted reasonably when it denied the Plaintiff's request
for a 30-and-Out Pension. “The trustees have an obligation to maintain the actuarial soundness of
their pension plan and not to grant pensions that violate the terms of the Plan. Granting pensions
in violation of the Plan could subject the trustees to liability.” Bagsby v. Central States,
Southeast and Southwest Areas Pension Fund, 162 F.3d 424, 428-29 (6th Cir. 1998). See also
ERISA § 406(a)(1)(D), 29 U.S.C.A. 1104(a)(1)(D); Patterson v. Shumate, 504 U.S 753, 760
(1992) ("A plan participant, beneficiary, or fiduciary, or the Secretary of Labor may file a civil
action to ‘enjoin any act or practice’ which violates ERISA or the terms of the plan.").

In a November 29, 1989 meeting, the Trustees amended the 703 Plan to provide a 30-and-

Out Pension. (Murdoch Affidavit § 21). During this meeting, the Trustees consulted with their

12