2000 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

3-9-2000

Smith v. Contini

Precedential or Non-Precedential:

Docket 99-5293

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Recommended Citation

"Smith v. Contini" (2000). 2000 Decisions. Paper 49.

http://digitalcommons.law.villanova.edu/thirdcircuit_2000/49
Filed March 9, 2000 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

No. 99-5293 

STANLEY SMITH, 

 Appellant 

v. 

ROBERT CONTINI; JOHN BARNES; JOHN 

KROMMENHOEK; RICHARD MULLER; JERRY 

MCCORMICK; LAWRENCE MCDERMOTT; JOHN DOE 

(name being fictitious); TEAMSTERS LOCAL 641 PENSION 

FUND; PETER VAN LENTEN; ROBERT CIRONE, as 

Trustee of the Teamsters Local 641 Pension Fund; 

THOMAS FLANNERY, Trustee of the Teamsters Local 641

Pension Fund 

On Appeal from the United States District Court 

for the District of New Jersey 

(D.C. Civ. No. 97-2692) 

District Judge: Hon. William H. Walls 

Argued January 25, 2000 

BEFORE: GREENBERG, ROTH, and ROSENN, 

Circuit Judges 

(Filed: March 9, 2000) 

 David Tykulsker (argued) 

 David Tykulsker & Associates 

 161 Walnut Street 

 Montclair, NJ 07042 

 Attorneys for Appellant 

 Gary A. Carlson (argued) 

 Lynch Martin Kroll 

 300 Executive Drive, Suite 010 

 West Orange, NJ 07052 

 Attorneys for Appellees 

OPINION OF THE COURT 

GREENBERG, Circuit Judge. 
I. INTRODUCTION 

This matter is before the court on an appeal by Stanley 

Smith in this Employee Retirement Income Security Act 

("ERISA"), 29 U.S.C. SS 1001 et seq., benefits case.1 Smith 

filed a complaint in the district court on May 23, 1997, 

after the defendants denied him retirement benefits. Smith 

asserted that defendants' construction of the pension plan 

they managed violated ERISA, and thus he brought this 

action seeking an injunction and other appropriate 

equitable relief to bring their construction of the plan into 

compliance with the statute. Of course, his ultimate goal is 

to obtain a pension. 

The Teamsters Local 641 Pension Fund (the "Local 641 

Fund") plan is a multiemployer, defined benefits pension 

plan within the meaning of 29 U.S.C. S 1002(2)(A)(37). The 

individual defendants are trustees and officers of the Local 

_________________________________________________________________ 

1. The district court exercised jurisdiction pursuant to 28 U.S.C. S 1331 

and 29 U.S.C. S 1132(e)(1) and (f). We have jurisdiction pursuant to 28 

U.S.C. S 1291. The defendants assert that the case is not ripe for 

appellate review because the district court granted summary judgment 

"dismissing the complaint" and not dismissing the action. See Appellee 

Br. at 12 (citing Newark Branch, N.A.A.C.P. v. Harrison, 907 F.2d 1408, 

1416 (3d Cir. 1990)). While it is true that the dismissal of a complaint 

without prejudice in some circumstances may not be afinal and 

appealable order because a court can grant leave to amend a complaint 

even after dismissal, see id. at 1416, in this case the district court did 

not dismiss the complaint without prejudice and it did not grant leave to 

amend. Moreover, Smith has stood on his complaint. See Shapiro v. UJB 

Fin. Corp., 964 F.2d 272, 278 (3d Cir. 1992). Thus, we have jurisdiction. 

 2 

641 Fund who, by virtue of their positions, owe afiduciary 

duty to Smith and the other beneficiaries of the Local 641 

Fund plan. 

The Local 641 Fund plan provides an array of retirement 

benefits to employees covered by the plan. As is relevant 

herein, the Local 641 Fund pension plan provides for two 

types of benefits to covered employees upon their reaching 

their normal retirement age. The first, a "Deferred Pension," 

is available to employees who accumulate at least ten years 

of vesting service under the Local 641 Fund. See Local 641 

Fund plan S 3.15, app. at 27. The second, a"Pro-rata 

Pension," is available to certain employees who have been 

members of other Teamsters locals, but did not attain a 

minimum of ten years of employment with employers within 

the jurisdiction of the Local 641 Fund so as to qualify for 
a Deferred Pension. The Local 641 Fund entered into

reciprocal agreements with the pension funds of other 

locals to provide for Pro-rata Pensions to certain employees 

who then could accumulate service credits in more than 

one fund so as to qualify for a pension. 

With respect to its Pro-rata Pension provisions, the Local 

641 Fund plan provides: 

 The Fund has a number of reciprocal agreements with 

 other pension funds under which service in the 

 jurisdiction of any of the reciprocating funds is 

 considered as service under this Fund for the purpose 

 of determining eligibility for benefits under the Fund. 

 * * * * 

 If an employee would meet the eligibility rules under 

 this Plan if his Related Credit was considered, but does 

 not meet the eligibility rules of the last Fund in whose 

 jurisdiction he worked, a Pro-rata pension based on 

 the time worked under this Plan only will be payable 

 even if the Employee has less than 10 Pension Credits 

 under this Plan. 

Local 641 Fund plan S 3.21, app. at 28. 

Generally, the Local 641 Fund plan calculates a Pro-rata 

Pension based on the amount of the pension to which an 

employee would have been entitled under the Local 641 

 3 

Fund plan if he had earned all of his combined pension 

credits under the jurisdiction of the Fund. See Local 641 

Fund plan, Addendum A, app. at 37. The Local 641 Fund 

then pays a pro-rata share, or percentage, of the pension to 

the employee that equals the percentage of the combined 

pension credits earned by the employee within the 

jurisdiction of the Local 641 Fund. See id.2 Under this plan, 

however, a Pro-rata Pension generally is paid only to those 

employees who had earned a minimum of 15 years of 

combined service credits. See id. at 28. 

As is relevant here, the Local 641 Fund maintains 

reciprocal agreements with the Teamsters Local 202 Fund 

and the Teamsters Local 816 Fund. Under these 

agreements, the Local 641 Fund agreed to apply service 

credits earned by employees with the Local 202 and 816 

Funds toward service credits earned in the Local 641 Fund 

plan. 

Smith, who was employed as a truck driver, earned two 
quarters of service credits with the Local 202 Fund between 

May and December 1966. From February of 1967 through 

December of 1973, Smith was employed by Eastern 

Express, Inc. ("Eastern Express") in New York City, earning 

26 quarters of service credits with the Local 816 Fund. 

Then Eastern Express moved to Elizabeth, New Jersey, and 

its employees came under the jurisdiction of the Local 641 

Fund. Smith, whom Eastern Express continued to employ 

after the move, earned 16 quarters of service credits with 

the Local 641 Fund between January 1974 and May 1977. 

Pursuant to its reciprocal agreements with the Local 202 

and 816 Funds, the Local 641 Fund accepted the service 

credits Smith had earned within the jurisdiction of those 

funds. Thus, when Smith terminated his covered 

employment in 1977, he had earned a total of 44 service 

credits (the equivalent of 11 years) -- 42 service credits (ten 

and one-half years) as an Eastern Express employee.

On November 11, 1993, Smith, having turned 65, applied 

for a pension from the Local 641 Fund. By letter dated 

_________________________________________________________________ 

2. Apparently the employee obtains the full pension from all of the funds, 

but we are not certain as to the mechanics of the program. 

 4 

June 21, 1994, the Local 641 Fund acknowledged that

Smith had earned 11 years of service credits, but informed 

him that he needed 15 years of service credits before he 

could receive pension benefits. See id. at 85. Smith 

appealed this decision on the ground that the Fund could 

require only ten, not 15, years of service before an employee 

was guaranteed pension benefits. The Fund denied Smith's 

appeal by a letter dated September 22, 1994. See id. at 86. 

Smith then brought this suit in the district court under 

29 U.S.C. S 1132(a)(3), alleging that the defendants' 

adherence to the 15-year service credit requirement was 

contrary to ERISA and constituted a breach of their

fiduciary duty. In particular, Smith sought a declaration 

that the defendants had breached their fiduciary duties and 

an order enjoining them to conform the rules and 

regulations of the Local 641 Fund plan to ERISA's 

maximum ten-year vesting requirement. See app. at 7. He 

also sought restitution by the award of a pension. 

Ultimately, after proceedings that we need not describe, 

the parties filed cross-motions for summary judgment. By 

an opinion and order dated April 8, 1999, the district court 

denied Smith's motion but granted the defendants' motion. 

See Smith v. Contini, No. 97-2692 (D.N.J. Apr. 8, 1999). In 
its opinion, the district court examined the Local 641 

Fund's pension plan and determined it complied with

ERISA guidelines. The court noted that the ERISA provision 

Smith thought applicable to this case, 29 U.S.C. 

S 1053(a)(2)(A), required plans to provide that an employee's 

right to his normal retirement benefit be nonforfeitable 

upon the attainment of his normal retirement age, provided 

that the employee have at least ten years of qualifying 

service. See id. at 9-10. But the court determined that the 

Deferred Pension offered by the Local 641 Fund plan

complied with ERISA's vesting provisions. See id. at 10 -11. 

The district court also noted that the Local 641 Fund 

plan provided a pension for those employees who had

performed less than ten years of vesting service within the 

jurisdiction of the Local 641 Fund, but who had 

accumulated service credits with a reciprocating fund. See 

id. But under the reciprocal pension, an employee would 

not receive any benefits unless he had a minimum of 15 

 5 

years of combined service within the jurisdiction of the 

various reciprocating funds. See id. It is undisputed that 

Smith did not meet that threshold. 

The district court concluded that the Pro-rata Pension 

offered by the Local 641 Fund pursuant to its reciprocity 

agreements with other funds was not governed by ERISA's 

ten-year vesting requirements. See id. at 11. The court 

stated: 

 Defendants are correct in their argument that ERISA 

 does not require them to provide pro-rata pensions or 

 reciprocal agreements with other funds. Under 29 

 U.S.C. S 1053(b)(1), defendants may disregard years of 

 service performed for an employer during a period in 

 which that employer did not maintain a pension plan 

 with the Local 641 Fund or a predecessor plan. The 

 pro-rata provisions in the Local 641 Fund's pension 

 plan do not violate the vesting requirements of ERISA, 

 29 U.S.C. S 1053(a)(2). Because neither the pro-rata 

 provisions nor the vesting schedule of the Local 641 

 Fund's pension plan violate ERISA, defendants' motion 

 for summary judgment to dismiss the complaint is 

 granted. 

Id. at 11. 

In addition to contending that the Pro-rata Pension was 

subject to a ten-year maximum vesting requirement, Smith 

argued that the Local 641 Fund should recognize his ten 

and one-half years of service with Eastern Express as 
vesting service under its plan, thereby entitling him to a 

Deferred Pension. The district court found that"[a]lthough 

plaintiff 's argument may have merit, the Court may not 

consider it at this point because it deals with the

application of the terms of the pension plan to plaintiff, not 

whether the terms of the pension violate ERISA. The Court 

may not consider this argument unless and until plaintiff 

brings an action under 29 U.S.C. S 1132(a)(1)(B) to

challenge his denial of benefits under the Local 641 Fund's 

pension plan." See id. at 12. Smith appeals. 

II. DISCUSSION 

We exercise plenary review with respect to the district 

court's decision on the cross-motions for summary 

 6 

judgment. See Seibert v. Nusbaum, Stein, Goldstein,

Bronstein & Compeau, 167 F.3d 166, 170 (3d Cir. 1999); 

Petruzzi's IGA Supermarkets, Inc. v. Darling-Delaware Co., 

998 F.2d 1224, 1230 (3d Cir. 1993). We will affirm only if 

we conclude that the pleadings, depositions, answer to 

interrogatories and admissions on file, together with the 

affidavits, show that the defendants were entitled to 

judgment as a matter of law on the basis of the undisputed 

facts. See Fed. R. Civ. P. 56(c). 

We start our discussion of the issues by recognizing that 

ERISA neither mandates the creation of pension plans nor 

in general dictates the benefits to be afforded once a plan 

is created. See Dade v. North American Philips Corp., 68 

F.3d 1558, 1561 (3d Cir. 1995) (citing Hlinka v. Bethlehem 

Steel Corp., 863 F.2d 279, 283 (3d Cir. 1988); H.R. Rep. No. 

93-807, 93d Cong., 2d Sess., reprinted in 1974 

U.S.C.C.A.N. 4670, 4677). Thus, ordinarily only the plan 

can create an entitlement to benefits. Consequently, "we are 

required to enforce the Plan as written unless we can find 

a provision of ERISA that contains a contrary directive." 

Dade, 68 F.3d at 1562. 

One of the areas in which ERISA requires express 

provisions in benefit plans concerns the nonforfeitability, 

often referred to as "vesting," of normal retirement benefits3 

payable to an employee who reaches the normal retirement 

age.4 In this regard, ERISA section 203(a), 29 U.S.C. 

S 1053(a), provides in relevant part: 

 Each pension plan shall provide that an employee's 

 right to his normal retirement benefit is nonforfeitable 

 upon the attainment of normal retirement age and in 

_________________________________________________________________ 
3. ERISA defines normal retirement benefits as "the greater of the early 

retirement benefit under the plan, or the benefit under the plan 

commencing at normal retirement age." 29 U.S.C.S 1002(22). 

4. ERISA allows the normal retirement age to be defined by the plan or 

sets the age as the later of the time a plan participant reaches the age 

of 65 or reaches his or her fifth anniversary of participation in the 

plan. 

See 29 U.S.C. S 1002(24). The parties do not dispute that Smith had 

attained the normal retirement age at the time he requested benefits 

under the Local 641 Fund. 

 7 

 addition shall satisfy the requirements of paragraphs 

 (1) and (2) of this subsection. 

 (1) A plan satisfies the requirements of this pa ragraph 

 if an employee's rights in his accrued benefit derived 

 from his own contributions are nonforfeitable. 

 (2) A plan satisfies the requirements of this pa ragraph 

 if it satisfies the requirements of subparagraph (A), (B), 

 or (C). 

 (A) A plan satisfies the requirements of this 

 subparagraph if an employee who has completed at 

 least 10 years of service has a nonforfeitable right to 

 100 percent of the employee's accrued benefit derived 

 from employer contributions.5 

The minimum vesting standards to which an employee 

benefit plan is obligated to adhere are based upon"years of 

service" as defined in ERISA section 203(b)(1). That section 

provides: 

 In computing the period of service under the plan for 

 purposes of determining the nonforfeitable percentage 

 under subsection (a)(2) of this section, all of an 

 employee's years of service with the employer or 

 employers maintaining the plan shall be taken into 

 account, except that the following may be disregarded: 

 * * * * 

 (C) years of service with an employer during any 

 period for which the employer did not maintain the 

 plan or a predecessor plan, defined by the Secretary of 

 the Treasury 

29 U.S.C. S 1053(b)(1). 
Defendants successfully argued in the district court that 

the Pro-rata Pension provided by the Local 641 Fund plan 

to an employee who had not earned the requisite ten years 

of service credit under its plan was not subject to the 

_________________________________________________________________ 

5. The ten-year vesting requirement we set forth reflects the version of 

ERISA section 203 in effect at all times relevant to the instant appeal. 

Because the Local 641 Fund plan was ratified before March 1, 1986, the 

parties agree that the current vesting limits do not apply. 

 8 

ERISA ten-year vesting requirement even though the 

employee overall had more than ten years of service credits. 

Thus, they assert on this appeal that "ERISA's minimum 

vesting standards [i.e., 29 U.S.C. S 1053] do not apply to 

pro-rata pension benefits." See Appellees Br. at 24. In 

support of this argument, defendants cite ERISA section 

203(b)(1)(C), 29 U.S.C. S 1053(b)(1)(C), quoted above, for the 

proposition that years of service earned under other plans 

may be disregarded for the purposes of vesting. See id. at 

19-20. 

While we seem not to have had the opportunity to 

address the specific question presented on this appeal, in 

Hoover v. Cumberland, Maryland Area Teamsters Pension 

Fund, 756 F.2d 977 (3d Cir. 1984), in an analysis 

instructive here, we did consider whether pro-rata pensions 

were subject to other limitations imposed by ERISA. In 

Hoover, the plaintiffs, as members of Teamsters Local 453, 

participated in the Cumberland Fund, a multiemployer 

pension plan established by the local union and employers 

engaged in collective bargaining with the local. See id. at 

979. The Cumberland Fund was a qualified plan subject to 

the vesting, funding, and participation requirements of the 

Internal Revenue Code of 1954 and ERISA. See id. Starting 

in 1967, the trucking companies employing the plaintiffs 

began moving their terminals to Pittsburgh, Pennsylvania, 

because of changes in interstate highway routes. See id. 

The drivers affected by these relocations, including the 

plaintiffs, moved with their employers to Pittsburgh and 

transferred to Teamsters Local 249 whose members 

participated in the Western Pennsylvania Teamsters and 

Employers Pension Fund (the "Western Fund"). As a result 

of the move, these drivers terminated their participation in 

the Cumberland Fund and joined the Western Fund, 

although the same company continued to employ them and 

they remained members of the same international union. 

See id. 

Responding to the disruption in local union jurisdiction 

and pension fund affiliation, a number of teamster pension 
funds prepared a reciprocal agreement which the trustees 

of the Cumberland Fund signed in 1968. See id. The

purpose of the reciprocal agreement was to provide full 

 9 

pensions for workers with continuous membership in the 

international union, but who, because of transfers to 

different locals, might not accrue sufficient work credit 

under any one plan to entitle them to full pension benefits. 

See id. at 979-80. Under the reciprocal agreement, a union 

member who transferred from the Cumberland Fund to the 

Western Fund could cumulate his service credit from each 

fund, and if his total combined service credit was sufficient 

on retirement, he would receive proportional pension 

benefits from each fund. See id. at 980. The reciprocal 

agreement did not specify a particular benefit rate, but 

rather required each fund to include in its plan documents 

a method for calculating the partial pensions. See id. The 

trustees of the Cumberland Fund triggered the dispute in 

Hoover by amending the plan in a way that reduced the 

pensions payable from the level in effect prior to the 

amendment. 

In response to the amendment, the Hoover plaintiffs

brought their suit alleging violations of ERISA section 

204(g), 29 U.S.C. S 1054(g). See Hoover , 756 F.2d at 981. 

Section 204(g) states that the "accrued benefit of a 

participant under a plan may not be decreased by an

amendment of the plan, other than an amendment 

described in section [302(c)(8)]." 29 U.S.C. S 1054(g)(1) 

(emphasis added). Thus, we indicated in Hoover that "the 

focus of our inquiry is whether the partial pension benefits 

[under the reciprocal agreement involved in that case] 

qualif[ied] as accrued benefits within the meaning of that 

term under ERISA" so that section 204(g) precluded their 

reduction. See Hoover, 756 F.2d at 981. 

A reading of both the Cumberland Fund plan and the 

legislative history of ERISA led us to conclude that the 

plaintiffs' partial pension benefits earned pursuant to 

reciprocity clauses satisfied ERISA's definition of an 

accrued benefit. See id. at 982. Accordingly, we determined 

that pension benefits provided pursuant to the reciprocity 

agreements were subject to the section 204(g) amendment 

limitations. See id. It was inherent in our determination 

that the benefits provided pursuant to the reciprocity 

agreements were provided under a covered plan for 

purposes of ERISA because the restriction in ERISA section 

 10 
204(g), 29 U.S.C. S 1054(g), is only on amendments of a 

plan as ERISA defines that term. 

ERISA section 203(a) is similar to the ERISA provision at 

issue in Hoover because it sets forth nonforfeitability 

requirements for pension plans. See 29 U.S.C. S 1053(a). As 

in Hoover, we hold that the benefits provided to employees 

pursuant to the Pro-rata Pension provisions of the Local 

641 Fund plan are provided in a pension plan within the 

meaning of ERISA. See 29 U.S.C. S 1002(2)(A) (defining 

pension plan as any plan, fund or program that provides 

retirement income to employees regardless of the method of 

calculating contributions, benefits or method of distributing 

benefits). Accordingly, the Pro-rata Pension is subject to the 

vesting requirements set forth in ERISA section 203 and 

thus an employee must be provided with a nonforfeitable 

right to his normal retirement benefit if the employee has 

completed ten years of service. See ERISA section 

203(a)(2)(A), 29 U.S.C. S 1053(a)(2)(A). 

Defendants' argument that the vesting requirements of 

ERISA are not applicable here because the Local 641 Fund 

was not required to provide its employees with a Pro-rata 

Pension is misplaced. As we mentioned, a plan is not 

required to provide any particular benefits to its employees 

and thus the ERISA provisions become applicable only after 

benefits are provided. See Dade, 68 F.3d at 1562. The Prorata Pension provision here seeks to provide normal

retirement benefits to plan participants who reach normal 

retirement age. ERISA sets forth clear vesting requirements 

for the provision of such benefits. See ERISA section 203(a), 

29 U.S.C. S 1053(a). 

Defendants argue, however, that even if ERISA section 

203(a) is found to be applicable, section 203(b)(1)(C) allows 

the Local 641 Fund to disregard service with an employer 

for any period in which the employer did not maintain the 

Local 641 Fund plan. We reject this argument. The 

underlying policy goal of ERISA is the protection of 

retirement benefits. Congress's chief purpose in enacting 

the statute was to ensure that workers receive promised 

pension benefits upon retirement. See Nachman Corp. v. 

Pension Benefit Guaranty Corp., 446 U.S. 359, 375, 100 

S.Ct. 1723, 1733 (1980). In constructing ERISA, Congress 

 11 

perceived the statute's accrual and vesting provisions as 

being at the heart of that protection. See Hoover, 756 F.2d 

at 985. 

 Unless an employee's rights to his accrued pension 

 benefits are nonforfeitable, he has no assurance that 
 he will ultimately receive a pension. Thus, pension 

 rights which have slowly been stockpiled over many 

 years may suddenly be lost if the employee leaves or 

 loses his job prior to retirement. Quite apart from the 

 resulting hardships, ... such losses of pension rights 

 are inequitable, since the pension contributions 

 previously made on behalf of the employee may have 

 been made in lieu of additional compensation or some 

 other benefit which he would have received. 

S. Rep. No. 93-383, 93d Cong., 2d Sess., reprinted in 1974 

U.S.C.C.A.N. 4890, 4930. 

Although the concepts of accrued benefits and vested 

benefits are distinct, the concerns expressed by this court 

in Hoover have force here. In fact, a district court, relying 

on the reasoning of Hoover, recently determined that the 

vesting requirements set forth in ERISA section 203 applied 

to service credits earned pursuant to reciprocity clauses. 

See Helms v. Local 705 Int'l Bhd. of Teamsters Pension Plan, 

1999 WL 965230, at *10-12 (N.D. Ill. Sept. 30, 1999) 

(finding that plan that offered both a standard deferred 

pension and a pension based upon reciprocity agreements 

was required to adhere to ERISA's vesting provisions for 

both pensions). This conclusion is consistent with our 

reasoning in Hoover and with the concerns expressed by 

Congress regarding the protection of accrued benefits and 

vested rights. 

The establishment of reciprocal pension agreements 

promotes transfers of employees between employers within 

funds that are parties to reciprocity agreements and 

provides the employees with the apparent security that they 

will receive a pension based upon their combined years of 

service. See Helms, 1999 WL 965230, at *12. It would be 

inconsistent with the purpose of ERISA to allow funds to 

promote movement by employees in these circumstances 

while at the same time subjecting such employees to

"penalties" for having so moved. 

 12 

Further, by opting to provide pension benefits based 

upon years or service earned under other funds, the Local 

641 Fund chose not to avail itself of the provisions of 

ERISA section 203(b) for the purposes of the Pro-rata 

Pension. Section 203(b) is permissive in that it states that 

a plan may disregard service with an employer during any 

period in which the employer did not maintain the plan. 

See 29 U.S.C. S1053(b)(1)(C). Thus, ERISA does not require 

a plan to disregard such service. Having chosen to provide 

a pension plan expressly based upon years of service 

earned with certain employers not within the Local 641 
Fund jurisdiction, the Local 641 Fund is barred from 

disregarding those years of service for the purposes of 

vesting under ERISA Section 203(a). 

We reiterate that we agree with the defendants and the 

district court that the defendants were under no obligation 

under ERISA to provide for reciprocal agreements and Prorata Pensions. Nevertheless, once having made the 

determination to provide for such pensions, the defendants 

were obliged to formulate a plan providing for vesting in 

accordance with ERISA section 203(a)(2)(A), 29 U.S.C. 

S 1053(a)(2)(A). Thus, this case represents a situation, not 

unusual in the law, that an actor`s discretion in how it 

engages in certain conduct is circumscribed, even though it 

was not obliged to engage in the conduct in thefirst 

instance. 

Finally, the defendants argue that they cannot be 

required to grant Smith a Pro-rata Pension because he 

brought this action under ERISA section 502(a)(3), 29 

U.S.C. S 1132(a)(3), rather than ERISA section 502(a)(1)(B), 

29 U.S.C. S 1132(a)(1)(B). See Ream v. Frey, 107 F.3d 147, 

151-53 (3d Cir. 1997). Smith contends, however, that he 

appropriately did not bring this action under 29 U.S.C. 

S 1132(a)(1)(B) because that section applies to actions 

brought "under the terms of the plan" and he acknowledges 

that the defendants acted consistently with the terms of the 

plan. Yet in his view they nevertheless breached their 

fiduciary duties because the plan as written does not 

comply with ERISA. 

Our recent opinion in Harte v. Bethlehem Steel Corp., No. 

98-2052, 2000 WL 225896, at *1 (3d Cir. Feb. 29, 2000), 

 13 

supports Smith's position that a fiduciary acting 

consistently with a plan nevertheless may breach its 

fiduciary duty. Smith thus proceeded properly in this case 

under ERISA section 502(a)(3). But we will not linger on the 

question of whether Smith sued under the wrong 

subsection of ERISA section 502, as we expect that the 

defendants now will apply the plan in accordance with the 

ERISA ten-year vesting requirements. Moreover, we would 

be reluctant to order benefits granted, a remedy that might 

be appropriate relief under ERISA section 502(a)(1)(B), as 

we do not know whether there is any impediment aside 

from the ten-year vesting requirement to Smith's recovering 

Pro-rata Pension benefits. For example, Smith may be 

entitled to a Deferred Pension, and we doubt that he will be 

entitled to obtain both pensions. Of course, in light of our 

disposition, we are acting without prejudice to Smith's 

taking such other steps as may be necessary to recover 
Pro-rata Pension benefits. 

In view of our foregoing conclusions, we will reverse the 

summary judgment of the district court to the extent that 

it held the Local 641 plan did not violate ERISA with 

respect to the statute's ten-year vesting requirement. The 

Pro-rata Pension requirements violate the vesting 

requirements by making benefits contingent on obtaining 

service credits beyond ERISA's permitted forfeiture periods 

and defendants have a fiduciary obligation to comply with 

the law. 

In addition to arguing that the Local 641 Fund's Pro-rata 

Pension violated ERISA's vesting provisions, Smith also 

contends that by reason of his ten and one-half years of 

service with Eastern Express, he was entitled to a Deferred 

Pension from the Local 641 Fund plan. The district court 

found that while this argument may have merit, it concerns 

the application of the terms of the plan to Smith and not 

whether the terms violate ERISA. The district court

concluded that such a challenge must be brought pursuant 

to ERISA section 502(a)(1)(B), 29 U.S.C. S 1132(a)(1)(B), 

dealing with the denial of benefits, and not in an action 

seeking equitable relief to remedy a breach of fiduciary duty 

under ERISA section 502(a)(3), 29 U.S.C. S 1132(a)(3). We 

agree with the district court on this point and consequently 

 14 

we will affirm the order for summary judgment to that 

extent without further discussion and without prejudice to 

a later action under section 502(a)(1)(B), if that should be 

appropriate. 

III. CONCLUSION 

For the reasons set forth above, the order for summary 

judgment of April 8, 1999, will be reversed in part and 

affirmed in part. The district court erred when it concluded 

that the Local 641 Fund plan's 15-year service credit 

requirement for a Pro-rata Pension did not violate ERISA. 

Accordingly, to the extent Smith sought to challenge the 

propriety of the 15-year requirement, this matter will be 

remanded to the district court for the entry of judgment in 

favor of Smith and the fashioning of appropriate relief 

pursuant to ERISA section 502(a)(3), 29 U.S.C. S 1132(a)(3). 

The decision of the district court will be affirmed, however, 

to the extent it held that Smith cannot proceed pursuant to 

ERISA section 502(a)(3), 29 U.S.C. S 1132(a)(3), to assert 

his rights to a Deferred Pension under the Local 641 Fund 

plan. 

A True Copy: 
Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

 15