Source: https://casetext.com/case/international-painters-v-shore
Timestamp: 2020-06-01 02:47:40
Document Index: 262984909

Matched Legal Cases: ['§ 1002', '§ 1132', '§ 1254', '§ 2101', '§ 1001', '§ 1002', '§ 1002', '§ 1002', '§ 1002', '§ 1003', '§ 1003', '§ 1053', '§ 1053', '§ 1053', '§ 1053', '§ 1053', '§ 1104', '§ 1113', '§ 1132', '§ 1132', '§ 1132', '§ 1144', '§ 1144', '§ 1301', '§ 1301', '§ 1', '§ 1', '§ 2530', '§ 84', '§ 1254', '§ 1132', '§ 1132', '§ 1144', '§ 1053', '§ 1002', '§ 3', '§ 3', '§ 3', '§ 16', '§ 1132', '§ 1144', '§ 1132', '§ 1144', '§ 1144', '§ 1144', '§ 1132', '§ 1144', '§ 1113', '§ 1001', '§ 1104', '§ 1104', '§ 1113', '§ 1113', '§ 81', '§ 24', '§ 381', '§ 24', '§ 51', '§ 2', '§ 1', '§ 1', '§ 5', '§ 1053', '§ 5', '§ 1053', '§ 1053', '§ 1053', '§ 1053', '§ 1', '§ 1053', '§ 2530']

International Painters v. Shore, No. 11-56 | Casetext Search + Citator
International Painters v. Shore
Full title:INTERNATIONAL PAINTERS AND ALLIED TRADES INDUSTRY PENSION PLAN…
Date published: Jul 8, 2011
No. 11-56 (U.S. Jul. 8, 2011)
No. 11-56.
RICHARD B. SIGMOND, KENT CPREK, (Counsel of Record), JENNINGS SIGMOND, PC., Philadelphia, PA.
Over the dissent of Judge N. Randy Smith on jurisdictional and substantive grounds, Judges Hawkins and Reinhardt of the Ninth Circuit found that the Employee Retirement Income Security Act ("ERISA"), provided jurisdiction to award of over 30 years of retroactive benefits totaling approximately $30,000, for "vested" disability retirement benefits arising from and payable due to a disability before ERISA (March 1974), and attorney fees of $138,646 (with additional pending requests for $126,587.98), based on an application to the Plan that was only made in 2003.
1. Whether ERISA confers federal court jurisdiction over a cause of action for benefits allegedly payable prior to ERISA's effective date (1975), but first asserted to the ERISA plan in and after 2003, and legal fees, with no time limits on a claim or lawsuit.
2. Whether, the courts below exceeded the bounds of judicial authority under ERISA by:
(a) substituting their judgment for the reasonable interpretation by plan fiduciaries (supported by prior circuit decisions) of boilerplate plan language (found identically in a wide variety of plans);
(b) legislatively imposing "vesting" rules for disability benefits that preclude any loss, lapse of coverage or change in benefits for which an employee ever was eligible in the past, at odds with ERISA and other circuits; and
(c) legislatively eliminating application requirements and mandating retroactive payment of retirement benefits, at odds with ERISA and other circuits.
The parties to the proceedings below were the Petitioner, International Painters and Allied Trades Industry Pension Plan and David Shore. The International Painters and Allied Trades Industry Pension Plan is a multiemployer employee pension benefit plan under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1002(2), (37)(A), 1301(a)(3). It may sue and be sued in its own name, 29 U.S.C. §§ 1132(d)
The Respondent before this Court is David Shore, an individual
A. The Circuits Disagree on ERISA. Jurisdiction over Claims Arising Before ERISA........................... 8 B. There Are Irreconcilable Differences in the Circuits About the Accrual of an ERISA Action for Benefits.............. 10 A. The Ninth Circuit Ruling is at Odds with this Court and Other Circuits in Eliminating Deferential Review and Mandating Different Rules on the East Coast and West Coast Under the Same Plan Language........................ 15 B. Every Other Court Has Found Disability Benefits Are Not Vested Benefits............................. 17 C. The IRS and Every Other Court Bar a Retroactive Awards of Benefits, Especially with 20/20 Hindsight...... 19 Shore v. International Painters and Allied Trades Industry Pension Plan Shore v. International Painters and Allied Trades Industry Pension Plan Shore v. International Painters and Allied Trades Industry Pension Plan Shore v. International Painters and Allied Trades Industry Pension Plan Shore v. International Painters and Allied Trades Industry Pension Plan Shore v. International Painters and Allied Trades Industry Pension Plan Shore v. International Painters and Allied Trades Industry Pension Plan Shore v. International Painters and Allied Trades Industry Pension Plan Shore v. International Painters and Allied Trades Industry Pension Plan TABLE OF AUTHORITIES CASES: Page Aetna Health Inc. v. Davila, 542 U.S. 200, 124 S.Ct. 2488 (2004)........ 6 Anderson v. Suburban Teamsters of Northern Rlinois Pension Fund Bd. of Trustees, 588 F.3d 641 (9th Cir. 2009)............... 18 Bamcord v. San Francisco Culinary, Bartenders and Service Employees Pension Fund, Local 2, 60 Fed.Appx. 40, 2003 WL 678141 (9th Cir. 2003).. 20 Barnes v. Lacy, 927 F.2d 539 (11th Cir. 1991). 12 Beasley v. Raytheon Aircraft Co., Not Reported in F.Supp.2d, 2006 WL 1895453 (D.Kan. 2006)... 15 Brown v. Owens Corning Inv. Review Committee, 622 F.3d 564 (6th Cir. 2010)............... 13 Canseco v. Constr. Laborers Pension Trust for S. Cal, 93 F.3d 600 (9th Cir. 1996)........ 20 Carey v. Int'l Broth. of Elec. Workers Local 363 Pension Plan, 201 F.3d 44 (2d Cir. 1999).... 11 Ceti v. Trustees of Pipefitters Local 537 Pension Plan, 975 F.Supp. 23 (D.Mass. 1997)........ 18 Chambless v. Masters, Mates Pilots Pension Plan, 772 F.2d 1032 (2d Cir. 1985)............... 20 Chiles v. Ceridian Corp., 95 F.3d 1505 (10th Cir. 1996).......................... 18 Cigna Corp. v. Amara, ___U.S. ___, 131 S. Ct. 1866, 2011 WL 1832824 (May 16, 2011).. 14 Conkwight v. Frommert, ___U.S. ___, 130 S.Ct. 1640 (2010)...................... 6 Connell v. Trustees of the Pension Fund of the Ironworkers Dist. Council of Northern New Jersey, 118 F.3d 154 (3d Cir. 1997).... 13 Contilli v. Local 705 International Brotherhood of Teamsters Pension Fund, 559 F.3d 720 (7th Cir. 2009)............................ 19 PGPage vii Cotter v. Eastern Conf. of Teamsters Retirement Plan, 898 F2d 424 (4th Cir. 1990)........... 20 Cowan v. Keystone Emp. Profit Sharing Fund, 586 F.2d 888 (1st Cir. 1978)............... 9 Crawford v. Pace Industry Union-Management Pension Fund (PIUMPF), 2011 WL 1988811 (M.D.Tenn. 2011)........................... 15 Davis v. Alabama Power Co., 383 F. Supp. 880 (N.D,Ala. 1974)........... 13 Began v. Ford Motor Co., 869 F.2d 889 (5th Cir. 1989) 8 DelCostello v. Teamsters, 462 U.S. 151, 103 S.Ct. 2281 (1983)........ 13 Edes v. Verizon Communications, Inc., 417 F.3d 133 (1st Cir. 2005)............... 13 Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101,109 S.Ct. 948 (1989).......... 16 Gluck v. Unisys Corp., 960 F.2d 1168 (3d Cir. 1992). 7 Grosz-Salomon v. Paul Revere Life Ins. Co., 237 F.3d 1154 (9th Cir. 2001).............. 18 Harper v. Occidental Petroleum Services, Inc., 111 F.3d 131, 1997 WL 189501 (6th Cir 1997). 15 Held v. Manufacturers Hanover Leasing Corp., 912 F.2d 1197 (10th Cir. 1990)............. 10 Jameson v. Bethlehem Steel Corp. Pension Plan of Bethlehem Steel Corp. and Subsidiary Companies, 765 F.2d 49 (3d Cir. 1985)...... 8 Karls v. Texaco, Inc., .........139 Fed. Appx. 29, 2005 WL 1189828 (10th Cir. 2005)................ 9 Lafferty v. Solar Turbines Intern., 666 F.2d 408 (9th Cir. 1982)............... 9 Lamontagne v. Pension Plan of the United Wire, Metal Mach. Pension Fund, 869 F.2d 153 (2d Cir. 1989)............................. 10 LaRue v. DeWolff, Boberg Associates, Inc., 552 U.S. 248, 128 S.Ct. 1020 (2008)........ 12 Leister v. Dovetail, Inc., 546 F.3d 875 (7th Cir. 2008)13 Martin v. Construction Laborer's Pension Trust for Southern California, 947 F.2d 1381 (9th Cir. 1991) 11 Menhorn v. Firestone Tire Rubber Co., 738 F.2d 1496 (9th Cir. 1984)............... 10 Miller v. Fortis Benefits Ins. Co., 475 F.3d 516 (3d Cir. 2007)................ 12 Mosley v. National Maritime Union Pension and Welfare Plan, 451 ESupp. 226 (E.D.N.Y. 1978) 15 Nikaido v. The Centennial Life Insurance Company, 42 F.3d 557 (9th Cir. 1994)....... 13 Quinn v. Country Club Soda Co., Inc. 639 F.2d 838 (1st Cir. 1982)............... 10 Redmon v. Sud-Chemie Inc. Retirement Plan for Union Employees, 547 F.3d 531 (6th Cir. 2008) 7 Robinson v. Sheet Metal Workers' Nat. Pension Fund, Plan A,441 F.Supp.2d 405 (D.Conn. 2006)... 15 Rodriguez v. MEBA Pension Trust, 872 F.2d 69 (4th Cir. 1989)................ 8, 11 Romero v. Allstate Corporation, 404 F.3d 212 (3d Cir. 2005)................ 11 Rueda v. Seafarers Int'l Union of North America, 576 F.2d 939 (1st Cir. 1978)............... 16 Samaroo v. Samaroo, 193 F.3d 185 (3d Cir. 1999) 21 Sandy v. Reliance Standard Life Insurance Company, 222 F.3d 1202 (9th Cir. 2000)..... 16 Scharffv. Raytheon Co. Short Term Disability Plan, 581 F.3d 899 (9th Cir. 2009)................ 12 Shawley v. Bethlehem Steel Corporation, 989 F.2d 652 (3d Cir. 1993)................ 17 Sieggreen v. Unum Provident Corp., Not Reported in F.Supp.2d, 2002 WL 31357045 (E.D.Mich. 2002) 15 Stevens v. Employer-Teamsters Joint Council No. 84 Pension Fund, 979 F.2d 444 (6th Cir. 1992) 9 Tanzillo v. Local Union 617, International Brotherhood of Teamsters, 769 F.2d 140 (3d Cir. 1985)............................. 8 Varity Corp. v. Howe, 516 U.S. 489, 116 S. Ct. 1065 (1996)....... 12 Watkins v. Westinghouse Hanford Co., 12 F.3d 1517 (9th Cir. 1993)............... 15 Williams v. Plumbers Steamfitters Local 60 Pension Plan, 48 F.3d 923 (5th Cir. 1995).. 18 Winer v. Edison Brothers Stores Pension Plan, 593 F.2d 307 (8th Cir. 1981)................ 10 Wolf v. National Shopmen Pension Fund, 728 F.2d 182 (3d Cir. 1984)................ 15 FEDERAL STATUTES 28 U.S.C. § 1254(1)..................... 1 28 U.S.C. § 2101(c)..................... 1 29 U.S.C. § 1001- 1191b.................. 12 29 U.S.C. § 1002........................ 3 29 U.S.C. § 1002(2)..................... ii 29 U.S.C. § 1002(22)(B)................. 18 29 U.S.C. § 1002(37)(A)................. ii 29 U.S.C. § 1003(a)..................... 2 29 U.S.C. § 1003(b)..................... 2 29 U.S.C. § 1053........................ 2, 18 29 U.S.C. § 1053(a)..................... 18, 20 29 U.S.C. § 1053(b)(1)(C)............... 18 29 U.S.C. § 1053(b)(1)(F)............... 18 29 U.S.C. § 1053(b)(3)(D)(1976)......... 18 29 U.S.C. § 1104(a)(l)(D)............... 12 29 U.S.C. § 1113........................ 12 29 U.S.C. § 1132........................ 1, 6 29 U.S.C. § 1132(a)(1)(B)............... 6, 16a 29 U.S.C. § 1132(d)..................... ii 29 U.S.C. § 1144........................ 2 29 U.S.C. § 1144(b)(l)............... 6, 8, 2a, 5a 29 U.S.C. § 1301- 1461................... 12 29 U.S.C. § 1301(a)(3).................. ii STATE STATUTES 24-12-123 24:36 381-b 81-2025 51.1-156 35 40 QUESTIONS PRESENTED........................... i LIST OF PARTIES............................... ii TABLE OF AUTHORITIES.......................... vi OPINIONS BELOW................................ 1 STATEMENT OF JURISDICTION..................... 1 CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED...................................... 1 STATEMENT OF CASE............................. 3 REASONS FOR GRANTING THE WRIT................. 6 I. THE COURT NEEDS TO SETTLE A CONFLICT IN THE CIRCUITS AND PROVIDE CLEAR RULES ON TIME LIMITS ON ERISA CLAIMS AND LAWSUITS — BOTH JURISDICTIONALLY AND AS STATUTES OF LIMITATION................... 6 II. AFTER DECADES OF RECORDKEEPING AND PLAN FUNDING UNDER SETTLED RULES, THE NINTH CIRCUIT SPLITS WITH THIS COURT AND OTHER CIRCUITS TO LEGISLATE VESTING AND PAYMENT RULES FOR BENEFIT PLANS AT ODDS WITH ERISA, WITH FULL RETROACTIVE EFFECT.................................. 14 CONCLUSION................................... 21 APPENDIX A.................................. la Ninth Circuit Opinion, , No. 10-15365 and 10-15437 (9th Cir. March 2, 2011) APPENDIX B................................... 10a District Court Order on Motions for Summary Judgment, , No. 2:08-cv-01508 (D.Nev. November 30, 2009) APPENDIX C................................... 31a District Court Judgment, , No. 2:08-cv-01508 (D.Nev. November 30, 2009) APPENDIX D................................... 32a District Court Order on Motion to Reconsider and Motion for Attorney Fees and Costs, , No. 2:08-cv-01508 (D.Nev. January 25, 2010) APPENDIX E................................... 35a District Court Judgment on Attorney Fees, , No. 2:08-cv- 01508 (D.Nev. January 26, 2010) APPENDIX F................................... 37a District Court Order on Motion for Clarification, , No. 2:08-cv- 01508 (D.Nev. February 24, 2010) APPENDIX G................................... 38a Ninth Circuit Order on Rehearing, , Nos. 10-15365 and 10-15437 (9th Cir. April 12, 2011) APPENDIX H................................... 39a Ninth Circuit Mandate, , Nos. 10-15365 and 10-15437 (9th Cir. April 20, 2011) APPENDIX I................................... 40a District Court Order on Mandate, , No. 2:08-cv~01508 (D.Nev. April 25, 2011) Ark. Code Ann. § (West)....... 15 La.Rev.Stat.Ann. § ................ 15 N.Y. Retire. Soc. Sec. Law § (McKinney) Neb. Rev. Stat. § ............... 15 Va. Code Ann. § (West).......... 15 RULES Fed.R.App.Pro. .......................... 1 Fed.R.App.Pro. .......................... 1 S.Ct. Rule 13.3............................ 1 REGULATIONS Treas. Reg. [26 C.F.R.] § 1.417(e)-1(b)(2)(i).. 19 Treas. Reg. [26 C.F.R.] § 1.417(e)-1(b)(3)(iv). 19 Dept. of Labor [29 C.F.R.] § 2530.203-3(a)..... 20 OTHER Constitution of Australia, § 84, reprinted http ://www.austlii.edu.au/au/legis/ctn/consol_act/ coaca430/s84.html............................. 15
The order and opinion of the Court of Appeals for the Ninth Circuit is currently reported at 2011 WL 717119 (C.A.9 (Nev.) and is reprinted in the Appendix to this Petition, page la, along with the order on the petition for rehearing, p. 38a. The memorandum decision of the District Court is not published. It is reprinted in the Appendix to this Petition, p. 10a.
A panel of the United States Court of Appeals for the Ninth Circuit entered an opinion and order by a vote of 2-1 on March 2, 2011, p. la. A timely combined petition for rehearing by the panel and en banc pursuant to Fed.R.App.Pro. 40, 35 was filed on March 14, 2011. The petition for rehearing was denied on April 12, 2011, p. 38a. If the lower courts had jurisdiction, the jurisdiction of this Court is timely invoked under 28 U.S.C. §§ 1254(1), 2101(c), and Rule 13.3 of this Court with respect to a petition for a writ of certiorari from a final judgment of the United States Court of Appeals for the Ninth Circuit.
The Court of Appeals and United States District Court for the District of Nevada grounded federal and subject matter jurisdiction on 29 U.S.C. § 1132(e), p. 2a. The dissent to the panel majority opinion concludes that jurisdiction was lacking, p. 5a. For reasons explained below, the Petitioner agrees with the dissent.
29 U.S.C. § 1132 (2006) Civil enforcement
(B)to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan;
(A)to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan;
29 U.S.C. § 1144 (2006). Other laws
(a) Supersedure; effective date. Except as provided in subsection (b) of this section, the provisions of this subchapter and subchapter III of this chapter shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in [29 U.S.C] section 1003(a) of this title and not exempt under [29 U.S.C] section 1003(b) of this title. This section shall take effect on January 1, 1975.
29 U.S.C. § 1053 (2006). Minimum vesting standards
(a) Nonforfeitability requirements. Each pension plan shall provide that an employee's right to his normal retirement benefit is nonforfeitable upon the attainment of normal retirement age . . .
29 U.S.C. § 1002 (2006). Definitions
(22)The term "normal retirement benefit" means the greater of the early retirement benefit under the plan, or the benefit under the plan commencing at normal retirement age. The normal retirement benefit shall be determined without regard to —
For purposes of this paragraph, a qualified disability benefit is a disability benefit provided by a plan which does not exceed the benefit which would be provided for the participant if he separated from the service at normal retirement age. . . . .
Shore's Work and Departure from the Plan in 1974, Before ERISA
Shore was born in 1933, Nev. 189. He worked with employers who contributed to the International Painters and Allied Trades Pension Plan ("IPAT Plan" or "Plan"), Nev. 131-135. Shore did not work for employers who contributed to the IPAT Plan after March 1974. Nev. 222. When Shore left the IPAT Plan, the Employee Retirement Income Security Act ("ERISA") did not exist.
The Appendix to this petition is cited "Appx. [page #]." The reproduced opinion from the District of Nevada includes the full text of plan provisions. Due to disagreement within the Ninth Circuit panel on basic facts, the petition cites to the underlying appendix filed with District Court, as "Nev. [page #]." The Nevada appendix is available on Pacer as Docket Item No. 40 in Civ. No. 08-1508 (D. Nev.). It largely parallels the Ninth Circuit record, which is not electronically accessible.
When Shore left the Plan in 1974, the Plan records showed 40 units of future (contributory) service credit and three years of vesting service from 1970 through 1974. Nev. 264. He had 79 units of prior service credit for work from 1963-1970 before his employer began contributions to the IPAT Plan, Nev. 364-365, for a total of 119 units. Had he vested, the plan in 1974 gave him a basic monthly benefit of no more than $79.00 per month, at normal retirement age (120 units x $0.50 per unit at 25 cent contribution rate), 1967 IPAT Plan, Art. III, § 3.02(b), 3.03(a). Nev. 7. If he were eligible, his disability benefit would have been a lower amount of 110% of a lower early retirement benefit, reduced by 6% per year from age 55 to 65, 1967 IPAT Plan, Art. Ill, §§ 3.09, 3.07, Nev. 8.
Shore admits that he called the IPAT Plan shortly after leaving work in the 1970s. Nev. 194. At that time, he was advised (accurately under plan records) that he was ineligible for pension benefits because he did not have "enough units to be vested." Nev. 264. The Plan had a pre-ERISA participant booklet that described disability benefits, Nev. 94-95, but Shore did not mention his disability or claim any additional service credit at the time. Nev. 264.
The 27-Year Hiatus Before Any Claim to the Plan
Shore did pursue and receive Social Security disability benefits, with a final award in 1976 that confirmed a disability onset date of March 1974. Nev. 390. Yet, he never again called or wrote to the Plan until 2003. Nev. 194, 264.
The 2003 Letter to the Plan and Appeal(s)
In February 2, 2003, Shore first wrote to the IPAT Plan regarding Ms eligibility for pension benefits, but still did not mention disability. Nev. 194, 264. In ongoing correspondence, the plan office and Trustees repeatedly informed Shore that he was not eligible for benefits because he had not vested under the Plan rules in effect at the termination of his covered work in March 1974 and had lost his service credit, benefits and participation in the plan due to a permanent break in service. Nev. 358-361, 364-365.
Shore first mentioned his disability and a claim for a "disability retirement pension" in a letter dated July 28, 2003, Nev. 269-270, and only provided his Social Security Disability Award (from 1976) on October 17, 2003, Nev. 370. He also then claimed additional work hours in 1974 to give him the 120 units of pension credit required for a disability pension. Nev. 368, 371, 342. However, in 1974, the IPAT Plan credited only hours for which contributions were paid to the plan, 1967 IPAT Plan, Art. IV, § 3, Art. I, § 16, Nev. 118, 107. Due to Shore's belated claim in 2003, the plan could not obtain payment for omitted hours due to limitations issues aside from lost records and witnesses. Docket #40, Exhibit 4 (D. Nev. Civ. No. 08-1508).
After further repetitive letters and responses, Shore sued in 2008. The District Court and Court of Appeals found that he was eligible for benefits in 1974 (before ERISA) and entered judgment for benefits back to that date.
Shore has pending requests for additional attorney fees and costs for $42,658.98 (for preparation of a fee application) in the District of Nevada and $83,929.00 in the Ninth Circuit. On June 27, 2011, Shore filed a motion for writ of execution despite a posted supersedeas bond in effect. Docket #88 (D. Nev. Civ. No. 08-1508).
Lack of Basis for Lower Court Jurisdiction
The lower courts erroneously found ERISA jurisdiction over this case. Federal jurisdiction under ERISA, 29 U.S.C. § 1132, does ". . . not apply to any cause of action which arose, or any act or omission which occurred, before January 1, 1975," 29 U.S.C. § 1144(b)(1) and 29 U.S.C. § 1132(a)(1)(B) allows suit only by a "participant" in the Plan. As explained below, Respondent plainly lost his status as a Plan participant no later than 1977 (over 20 years before his lawsuit) and he relies entirely on a cause of action that was complete and payable before ERISA in 1974.
"People make mistakes. Even administrators of ERISA plans,. . . . .," Conkwight v. Frommert, 130 S.Ct. 1640, 1644 (2010). The core question presented by this petition is whether those mistakes (or acts found to be mistakes by a court years after the fact) haunt the plan forever.
I. THE COURT NEEDS TO SETTLE A CONFLICT IN THE CIRCUITS AND PROVIDE CLEAR RULES ON TIME LIMITS ON ERISA CLAIMS AND LAWSUITS-BOTH JURISDICTIONALLY AND AS STATUTES OF LIMITATION
This case is one book end to a wide range of opinions on the temporal scope of ERISA jurisdiction and ERISA time limits on lawsuits. ERISA plan administrators and the courts need a resolution of these conflicts by the Court to fulfill, per Aetna Health Inc. v. Davila, 542 U.S. 200, 208-209, 124 S.Ct. 2488, 2495-2496 (2004), "[t]he purpose of ERISA . . . to provide a uniform [federal] regulatory regime over employee benefit plans."
In the ruling below, Judges Hawkins and Reinhardt of the Ninth Circuit, over a dissent of Judge N. Randy Smith, found federal ERISA jurisdiction over a claim and cause of action for disability benefits that was complete and payable before ERISA was enacted (in 1974). The Ninth Circuit concluded that there was no ERISA limitations defense (nor any laches defense), despite a lapse of nearly 30 years before any claim or mention of the 1974 disability to the Plan, on the theory that "the accrual of Shore's cause? of action [only occurred] when he applied for and was denied disability benefits in 2008, . . ." Appx. p. 2a. With plans already strained by the financial tumult of 2008 and millions of baby boomers lining up to retire, the opinion provides the "good faith" basis for an additional burden of literally thousands of cases across the country on stale pension claims, with additional demands for attorney fees and no time limits.
The other bookend is illustrated by the hypothetical in Gluck v. Unisys Corp., 960 F.2d 1168, 118.1 (3d Cir. 1992), with the concurrence of Judge (now Justice) Alito, rejecting a limitations period measured solely from the date of actual attempted retirement
. . .we . . . would not apply the Wage Payment and Collection Law limit because it provides no period of repose to an employer in the case of future benefits. A claim for an ERISA violation affecting the retirement benefit of a twenty-year old employee might accrue 45 years later, when the benefit would be "due and payable." Although the doctrine of laches might preclude the action, we are unwilling to open the door to a 48-year [45 plus 3] limitations period
Redmon v. Sud-Chemie Inc. Retirement Plan for Union Employees, 547 F.3d 531, 540 (6th Cir. 2008), concurred and rejected a claim to delay the limitations period on prior benefits until a formal application and denial, as the argument ". . . that her failure to utilize private avenues of dispute resolution. . . . [means that] . . .her claim might never accrue and the statute of limitations would never expire, . . . contrary to the policy of repose." A. The Circuits Disagree on ERISA Jurisdiction over Claims Arising before ERISA
The circuits cannot even agree on ERISA jurisdiction over events and claims arising before adoption of ERISA. While the law is nearly 40 years old, many, even most, of the millions of people now reaching retirement age worked, like Respondent Shore, and earned (and lost) pension credit based on events before ERISA's effective date.
29 U.S.C. § 1144(b)(1) provides that "[t]his section [applying federal law] shall not apply with respect to any cause of action which arose, or any act or omission which occurred, before January 1, 1975." The decision below finds this rule inapplicable and stretches federal jurisdiction to its maximum to grant relief for a failure to pay disability benefits in early 1974 (before ERISA was even enacted) with the additional freight of retroactive benefit payments and attorney fees.
Common sense might suggest that a claim for a disability pension payable in April 1974 is not an ERISA action arising in 1975 or later, but the Ninth Circuit's conclusion is not unique. Other circuits have read the "cause of action" exclusion to be co-extensive with a rule that "[a]n ERISA cause of action does not accrue until a claim of benefits has been made and formally denied," Rodriguez v. MEBA Pension Trust, 872 F.2d 69, 72 (4th Cir. 1989). In this line, thee "act or omission" exclusion is also inapposite as the denial of any claim made after 1974 is treated as a post-ERISA "act," without regard to the date of operative events. Id (collecting cases); Tanzillo v. Local Union 617, International Brotherhood of Teamsters, 769 F.2d 140, 144 (3d Cir. 1985); Jameson v. Bethlehem Steel Corp. Pension Plan of Bethlehem Steel Corp. and Subsidiary Companies, 765 F.2d 49, 52 (3d Cir. 1985); Degan v. Ford Motor Co., 869 F.2d 889, 894-895 (5th Cir. 1989). As explained in Karls v. Texaco, Inc., 139 Fed. Appx. 29, 31-32, 2005 WL 1189828, *2 (10th Cir. 2005), this approach "essentially collapses the claim-accrual and predicate-act provisos of § 1144(b)(1) into a single inquiry."
Cowan v. Keystone Emp. Profit Sharing Fund, 586 F.2d 888, 894-895 (1st Cir. 1978), rejected this analysis of the "cause of action" exclusion.
Cowan . . . argues that § 1144 was intended only to establish a date for preempting state regulation and was not designed to postpone the effective date of federal court jurisdiction. . . . . Since federal jurisdiction over pre-1975 causes of action . . . would have to be predicated on federal common law rights, this reasoning requires assuming in effect that Congress intended state and federal common law remedies to coexist until January 1, 1975,. . . . There is no hint that this was its intention. . . . we conclude that federal § 1132 jurisdiction over common law claims is available only for those common law causes of action that arose after January 1, 1975.
Under this test, a "cause of action" that accrued under a state law "installment payment" (as with the 1974 payments claimed here) or other approach should be excluded from ERISA jurisdiction.
There is also a different analysis of the "acts or omissions" clause of § 1144(b)(1) to remove ERISA jurisdiction where ". . .the acts after the preemption date [1/1/75] were merely formalities adjunct to a set of acts before the pre-emption date which were more substantially related to the cause of action." Lafferty v. Solar Turbines Intern., 666 F.2d 408, 410 (9th Cir. 1982) (collecting supporting cases from First, Fourth, Fifth and Eighth Circuits). In the phrase of Stevens v. Employer-Teamsters Joint Council No. 84 Pension Fund, 979 F.2d 444, 454 (6th Cir. 1992) (collecting cases on split in circuits), `"any `act or omission' is limited to. . . . those acts or omissions on which the plan trustees base their denial of benefits." Under Quinn v. Country Club Soda Co., Inc. 639 F.2d 838, 841 (1st Cir. 1982) quoting Winer v. Edison Brothers Stores Pension Plan, 593 F.2d 307, 313 (8th Cir. 1981),"[t]he phrase `act or omission' . . . `refer[s] to those significant facts which give rise to a claim but which fall short of establishing a cause of action.'"
As in Stevens, 979 F.2d at 448, 455, Shore here rests his claim for the additional credit needed for a disability pension on omitted contributions for service in early 1974. As in Lamontagne v. Pension Plan of the United Wire, Metal Mach. Pension Fund, 869 F.2d 153, 156-157 (2d Cir. 1989), citing and discussing Menhorn v. Firestone Tire Rubber Co., 738 F.2d 1496 (9th Cir. 1984), the Trustees denied him benefits based on that pre-ERISA omission and, as discussed below, a pre-ERISA break-in-service rule that cancelled his service and followed inexorably from his inability to work after March 1974. Even if the plan required a Social Security disability award to establish a right to disability benefits, it too simply followed from the 1974 disability and is not an act or omission of an ERISA actor that establishes federal jurisdiction.
B. There Are Irreconcilable Differences In the Circuits About the Accrual of an ERISA Action for Benefits
This is no clear answer to a question about the date that a pension benefit claim accrues under ERISA. See generally, Held v. Manufacturers Hanover Leasing Corp., 912 F.2d 1197 (10th Cir. 1990) (discussing full panoply of possible state and federal options for limitations under ERISA). The application of any rule other than the pure "formal application" rule of the Ninth Circuit will change the result in this case. Benefit Denial Approach. The Ninth Circuit followed strictly the line of cases that (as with jurisdiction) concludes that "[a]n ERISA cause of action does not accrue until a claim of benefits has been made and formally denied," Rodriguez v. MEBA Pension Trust, 872 F.2d 69, 72 (4th Cir. 1989) (1985 application complaining about events in 1969 and 1972; collecting early cases from the Third, Ninth and Fifth Circuits). Under this approach, no limitations period began before Shore finally wrote to the Plan about disability benefits in 2008 — a full 29 years after all relevant events — and the 6-year contract limit under Nevada law ran only from that date with no time limit on claims in any practical sense.
Clear Repudiation Doctrine. Faced with situations akin to this case, other circuits have adopted a test that an ERISA claim ". . . accrues upon a clear repudiation by the plan that is known, or should be known, to the plaintiff-regardless of whether the plaintiff has filed a formal application for benefits." Carey v. Int'l Broth, of Elec. Workers Local 363 Pension Plan, 201 F.3d 44, 47-48 (2d Cir. 1999) (citing Seventh, Eighth, and Ninth Circuits). See, also Romero v. Allstate Corporation, 404 F.3d 212, 222-223 (3d Cir. 2005) (collecting cases). The Plan's admitted oral denial of Shore's claim on his call to the Plan office in the 1970s should trigger this rule and bar his suit, no later than 1980 under Nevada's 6-year statute of limitations. Due Diligence and Discovery. The courts analogize the "clear repudiation" test to the general federal rule that a "statute of limitations begins to run when a plaintiff discovers or should have discovered the injury that forms the basis of his claim." Miller v. Fortis Benefits Ins. Co., 475 F.3d 516, 520 (3d Cir. 2007). Yet, they differ, as a due diligence test does not require an affirmative act of repudiation by the Plan. Under the general test, the Plan booklet provided to Shore gave him constructive knowledge of the Plan's vesting and disability rules, Scharff v. Raytheon Co. Short Term Disability Plan, 581 F.3d 899, 908 (9th Cir. 2009) (citing cases from four circuits), so as to start the clock on his claim for benefits in the 1970s and stop it by the early 1980s.
See, Martin v. Construction Laborer's Pension Trust for Southern California, 947 F.2d 1381, 1384 (9th Cir. 1991), (pre-ERISA claim barred by slate limitations period after repudiation, despite further post-ERISA correspondence with the plan).
C.f. Barnes v. Lacy, 927 F.2d 539, 543-544 (11th Cir. 1991) (absent untrue statements to employees regarding a plan, there is no disclosure obligation beyond a summary plan description).
ERISA Fiduciary Limit. As the lines between "benefit" and "fiduciary" claims to enforce ERISA benefit rights have become less obvious, a more recent path applies the express statutory federal limit of 29 U.S.C. § 1113 to benefit (as well as other fiduciary) claims. The duties of ERISA plan fiduciaries include an obligation to administer a plan ". . . in accordance with the documents and instruments governing the plan in so far as such documents and instruments are consistent with [Titles I and IV of ERISA, 29 U.S.C. § 1001- 1191b, 1301-1461], 29 U.S.C. § 1104(a)(1)(D). As Varity Corp. v. Howe, 516 U.S. 489, 511-512, 116 S. Ct. 1065, 1077-1078 (1996), observed "ERISA specifically provides a remedy for breaches of fiduciary duty with respect to the interpretation of plan documents and the payment of claims."
The Court has rejected arguments that an individual may not obtain individual benefits through a claim for breach of fiduciary duty. LaRue v. DeWolff, Boberg Associates, Inc., 552 U.S. 248, 255-256,128 S.Ct. 1020 (2008). A claim for breach of 29 U.S.C. § 1104(a)(1)(D) appears likely in any case seeking to enforce amendment of a plan to comply with the substantive pension benefit rules of ERISA.
The § 1113 rules allow the "shorter of six years from the date of the breach to file suit or (with an immaterial exception) three years `after the earliest date on which the plaintiff had actual knowledge of the breach.'" Leister v. Dovetail, Inc., 546 F.3d 875, 878, 881 (7th Cir. 2008) (applying § 1113 to claim for 401k contributions, which are the same as benefits in a defined contribution pension plan). See also, Connell v. Trustees of the Pension Fund of the Ironworkers Dist. Council of Northern New Jersey, 118 F.3d 154, 156-157 n. 4 (3d Cir. 1997) (applying Section 1113 to a claim of improper break-in-service and benefit denial); Ecles v. Verizon Communications, Inc., 417 F.3d 133, 140-142 (1st Cir. 2005) (claim of improper exclusion from plan). C.f., DelCostello v. Teamsters, 462 U.S. 151, 172, 103 S.Ct. 2281, 2294 (1983) (applying uniform federal rule to effectuate federal labor policy). The combination of an express plan denial in the 1970s, a plan booklet describing vesting and disability benefit rules, Brown v. Owens Coming Inv. Review Committee, 622 F.3d 564, 571 (6th Cir. 20.10), and the absence of payment from 1974 forward, Miller, 475 F.3d at 522, provided "actual knowledge" in the 1970s that is sufficient to bar the Shore's claims before 1980 under this approach.
Common Law Installment Approach. A pre-ERISA common law view looked at the monthly life annuity provided by a defined benefit pension plan as a type of "installment-payments" contract, with each monthly due date starting the clock on a separate limitations period. See, e.g., Davis v. Alabama Power Co., 383 F. Supp. 880, 893 (N.D.Ala. 1974) (applying Alabama law). See also, Nikaido v. The Centennial Life Insurance Company, 42 F.3d 557, 560 (9th Cir. 1994) (same with date measured from proof of disability), overruled by Wetzel v. Lou Ehlers Cadillac Group Long Term Disability Insurance Program, 222 F.3d 643, 647 (9th Cir. 2000)( en banc). While the ERISA decisions decline this or other "continuing violation" theories to avoid a completely open-ended limitations period, Miller, 475 F.3d at 523, it has the saving grace of eliminating liability for retroactive payments back to 1974.
Laches Defense. The final option is to accept the invitation of Gluck, 960 F.2d at 1181 n. 13 (3d Cir. 1992), to conclude that "the doctrine of laches might preclude [this belated] action . . ." over events in 1974. A benefits lawsuit ". . . concerns a suit by a beneficiary against a plan fiduciary (whom ERISA typically treats as a trustee) about the terms of a plan (which ERISA typically treats as a trust)." Cigna Corp. v. Amara, 131 S. Ct. 1866, 2011 WL 1832824 *12 (May 16, 2011). A concomitant application of a defense of laches will protect plans and their participants from stale claims.
II. AFTER DECADES OF RECORDKEEPING AND PLAN FUNDING UNDER SETTLED RULES, THE NINTH CIRCUIT SPLITS WITH THIS COURT AND OTHER CIRCUITS TO LEGISLATE VESTING AND PAYMENT RULES FOR BENEFIT PLANS AT ODDS WITH ERISA, WITH FULL RETROACTIVE EFFECT
In a de novo review of the pre-ERISA IPAT plan, Judge Hawkins, writing for the panel majority, extends his opinion in Canseco, to conclude that "by its mandatory language (`shall be entitled'), the 1967 Plan entitles Shore to disability benefits retroactive to his disability onset date [before ERISA in 1974]," Appx. p. 3a, which could not be lost by a break in service. Appx. p. 3a. The clause interpreted is so common in pension plans as make the ruling tantamount to a statutory ruling or legislation, at odds with ERISA, this Court and other circuits.
The exact phrase "shall be entitled to retire" on which the Ninth Circuit relies to create "vested" rights shows up in at least 25 published decisions the Federal Retirement (FPEN) library of Westlaw, so as to affect a wide range of major corporate single-employer plans and multiemployer plans directly. The shortened "shall be entitled" excerpt quoted by the Ninth Circuit to support its decision is undoubtedly even more prevalent and broadens the reach of this "interpretation" exponentially. A. The Ninth Circuit Ruling is at Odds with this Court and Other Circuits in Eliminating Deferential Review and Mandating Different Rules on the East Coast and West Coast Under the Same Plan Language
See, e.g., Watkins v. Westinghouse Harford Co., 12 F.3d 1517, 1524 (9th Cir. 1993); Harper v. Occidental Petroleum Services, Inc., 111 F.3d 131, 1997 WL 189501, *2 (6th Cir 1997)(table); Buck v. Kraft Food Global, Inc., Not Reported in F.Supp.2d, 2007 WL 433240, *4 (M.D.Tenn. 2007); Beasley v. Raytheon Aircraft Co., Not Reported in F.Supp.2d, 2006 WL 1895453, *6 (D.Kan. 2006); Sieggreen v. Unum Provident Corp., Not Reported in F.Supp.2d, 2002 WL 31357045, *6 (E.D.Mich. 2002); Mosley v. National Maritime Union Pension and Welfare Plan, 451 F.Supp. 226, 230 (E.D.N. Y. 1978); Wolf v. National Shopmen Pension Fund, 728 F.2d 182, 191 (3d Cir. 1984); Robinson v. Sheet Metal Workers' Nat. Pension Fund, Plan A, 441 F.Supp.2d 405, 411 (D.Conn. 2006); Crawford v. Pace Industry Union-Management Pension Fund (PIUMPF), 2011 WL 1988811, *9 (M.D.Tenn. 2011);
The impact extends even further. A simple Google search of the full actual IPAT Plan phrase "shall be entitled to retire" also finds it even today in the (publicly-available) retirement plans of Nebraska, Neb. Rev. Stat. § 81-2025, Louisiana, La.Rev.Stat.Ann. § 24:36, 11.558, New York, N.Y. Retire. Soc. Sec. Law § 381-b (McKinney), Arkansas, Ark. Code Ann. § 24-12-123 (West), Virginia, Va. Code Ann. § 51.1-156 (West), and, according to Google, even Section 84 of the Constitution of the Commonwealth of Australia. The "vesting" effect of the Ninth Circuit ruling can only add fuel to the current fires of debate over changes in public pension plan benefits.
The First Circuit interpreted a plan with the exact same "shall be entitled to retire" phrase in an earlier case seeking disability benefits despite a break in service, Rueda v. Seafarers Int'l Union of North America, 576 F.2d 939, 940 (1st Cir. 1978). It reached the opposite conclusion to find that Rueda was not entitled to benefits due to the absence of recent service before his application. Id. 576 F.2d at 943. See also, Lamontagne, 869 F. 2d at 156 (benefits denied due to break and cancellation of service that terminated participant status). The interests of uniform national plan administration clearly are not served when sailors and painters on the West Coast have vested disability benefits (which have not been funded based on past precedent), while their colleagues on the East Coast are denied them under the same plan language.
The conflict shows the importance of judicial deference to plan fiduciaries in assuring uniform national results for participants. The Rueda court deferred to the trustees and denied the claim; the ruling below did the opposite.
Where an employee benefit plan provides discretion to make determinations of participant eligibility and plan interpretation, such determinations are reviewed only for abuse of discretion under ERISA. Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948 (1989). Respondent and the courts below acknowledged that Shore's claim is based on the current [2003] version of the IPAT Plan. Appx. 16a. The 2003 Plan had a claims procedure which applied to all participants and granted discretionary authority to interpret the plan to the Trustees, Appx. 16a, referencing 2003 IPAT Plan, § 2.03 Sandy v. Reliance Standard Life Insurance Company, 222 F.3d 1202, 1205-1206 (9th Cir. 2000) (collecting same phrases as providing discretionary review). The Ninth Circuit nonetheless concluded that a limited incorporation of the 1967 Plan (to determine retirement eligibility and benefits of those who left before ERISA), Appx. 2a, quoting 2003 IPAT Plan, § 1.04, and the absence of discretionary authority in the 1967 Plan nonetheless left the case open to de novo review. Appx. 3a. The result effectively bars any Firestone amendment of prior plans and leaves pension plans open to second-guessing on older claims under varying rules in different states — as in Rueda and this case.
The IPAT Plan disability benefit was an "ancillary" insurance-type benefit for an active "Employee" who "fulfilled all the conditions for entitlement to benefits, including the requirement for advance application." 1967 IPAT Plan, Art. V, § 1, Nev. 119. Art. I, Section 8 of the 1967 IPAT Plan (Nev. 106), defined an "Employee" as a person who was working under an agreement to pay contributions to the Plan. Under Art. IV, § 5(a) of the 1967 Plan, (Nev. 118), "[i]t shall be considered a break in employment and all of an Employee's previously accumulated Pension Credit shall be cancelled if he fails to earn at least six units of Pension Credit [6 x 150 hours = 900] in a period of three consecutive calendar years." Shore applied for benefits in 2003, but his disability "policy" had lapsed back in 1977, when he ceased to be an "Employee" and lost his units of service credit. Under Firestone Tire, 489 U.S. at 117-118, 109 S.Ct. at 958, and Shawley v. Bethlehem Steel Corporation, 989 F.2d 652 (3d Cir. 1993), the cancellation of service and participation also deprived Shore of the standing to due under ERISA.
B. Every Other Court Has Found Disability Benefits are Not Vested Benefits
In its de novo review, the panel majority concluded that disability pension benefits "vested" in 1974 because Shore had ". . . satisfied all pension eligibility requirements and was. already entitled to retire," "the Plan's break-in-service rules do not apply to a worker" who is thus vested and that these anti-forfeiture rules are "not contingent on the type of benefit at issue." Appx. 3a. No other court agrees with this novel ruling. ERISA has an express vesting rule for "normal retirement benefits," 29 U.S.C. § 1053(a). Disability benefits are expressly excluded from the definition of the protected "normal retirement benefit," 29 U.S.C. 1002(22)(B). Shore did not vest under ERISA rules, nor under the pre-ERISA plan document as "[i]t is undisputed that, at the time Shore was disabled, he did not have 60 future pension credits, and was not 50 years of age" required for vesting. Appx. 7a (Smith, J, dissenting) (quoting 1967 IPAT Plan, Art. IV, § 5). The express vesting rule of ERISA and its exclusion of disability benefits of the type at issue here is a sufficient basis to reject the implied "vesting" doctrine of the Ninth Circuit as an improper judicial amendment of the Plan.
Pre-ERISA break rules remain enforceable under ERISA, 29 U.S.C. § 1053(b)(1)(F). Shore did not even vest under ERISA, 29 U.S.C. § 1053, as he accumulated only three (3) years of vesting service (1,000 hours with contributing employers in a year) during his work to 1974. This would still be cancelled by a permanent break in 1977 under the "parity break" rule in the original text of ERISA, 29 U.S.C. § 1053(b)(3)(D)(1976). "Past service" credit (before the IPAT plan was established in 1967 or an employer begins contributions) need not (and does not, under the IPAT Plan) count for vesting under ERISA, 29 U.S.C. § 1053(b)(1)(C).
Disability benefits may be changed to deny benefits even though an employee could have been eligible at an earlier date. This is true for both disability insurance policies (welfare plans), Chiles v. Ceridian Corp., 95 F.3d 1505, 1508, 1509, 1510, 1511, 1513, 1514 (10th Cir. 1996); Grosz-Salomon v. Paul Revere Life Ins. Co., 237 F.3d 1154, 1160 (9th Cir. 2001), and pension plans, Williams v. Plumbers Steamfitters Local 60 Pension Plan, 48 F.3d 923, 924, 925 (5th Cir. 1995); Celi v. Trustees of Pipefitters Local 537 Pension Plan, 975 F.Supp. 23, 27 (D.Mass. 1997); Anderson v. Suburban Teamsters of Northern Illinois Pension Fund Bd. of Trustees, 588 F.3d 641, 651 (9th Cir. 2009) (collecting cases from Second and Sixth Circuits). If the ruling below is correct, disability insurers and welfare plans on the West Coast (and elsewhere), as well as pension plans, will be stunned to find themselves burdened with new claims for "vested" disability benefits on policies that lapsed long ago without the timely "proof of loss," Nikaido, 42 F.3d at 560, uniformly required by disability insurance policies.
C. The IRS and Every Other Court Bar a Retroactive Awards of Benefits, Especially with 20/20 Hindsight
The 1967 IPAT Plan had a clear general rule prohibiting benefits before a participant "fulfilled all the conditions for entitlement to benefits, including the requirement for advance application." Appx. 28a, quoting 1967 IPAT Plan, Article V, Section 1. The panel majority, Appx. 3a, quoting Canseco, 93 F.3d at 606, dismisses this rule as a" . . . merely a `procedural requirement' "to initiate payment of benefits" rather than a condition of entitlement." The ruling exposes plans to claims from any employee (or an estate) who could (but did not) retire and later finds with 20/20 hindsight that he received less than the maximum benefits.
The other circuits (and the IRS) recognize that the date of an application, (i.e. — actual retirement) is critical in defining the date that a pension will start and hence Its cost. Thus, "[t]here is no problem with an [advance] application requirement." Contilli v. Local 705 International Brotherhood of Teamsters Pension Fund, 559 F.3d 720, 722 (7th Cir. 2009). Indeed, the Internal Revenue Service, the agency charged with regulations in this area, requires that the normal form of any defined benefit pension must be an annuity (normally paid monthly) which begins only after the date of application, Treas. Reg. [26 C.F.R.] § 1.417(e)-1(b)(2)(i), (b)(3)(iv), unless the plan opts to provide a "retroactive annuity starting date" and the participant (and spouse) explicitly accept that date.
The IRS rules interpret the vesting rules for normal retirement benefits, under 29 U.S.C. § 1053(a), to require an actuarial adjustment to monthly benefits for a delay in payment (absent continuing work) after that date. ERISA does not regulate payment of benefits before normal retirement age, 29 C.F.R. § 2530.203-3(a); Chambless v. Masters, Mates Pilots Pension Plan, 772 F.2d 1032, 1041 (2d Cir. 1985).
Canseco, 93 F.3d at 603, the case on which it relies, Cotter v. Eastern Conf. of Teamsters Retirement Plan, 898 F.2d 424, 428 (4th Cir. 1990), and Contilli, 559 F3d at 721-722, all concerned normal retirement benefits. Canseco was thus found inapplicable to disability benefits by a prior Ninth Circuit panel, Barncord v. San Francisco Culinary, Bartenders and Service Employees Pension Fund, Local 2, 60 Fed.Appx. 40, 41-42, 2003 WL 678141, *1 (9th Cir. 2003) (unpublished).
If benefits are "vested" once anyone is eligible to retire and may be claimed retroactively at anytime, pension plans will fall apart. Like Social Security, a defined benefit pension plan is "reverse" life insurance; it pays people who live. Unlike life insurance it lacks a clear payment trigger, and rests on assumptions about the dates that people will retire, often well after the earliest date that they become eligible for benefits. An annuity that will pay $100 per month from age 55 to a normative age 80 (or beyond) is simply more expensive than a benefit of $100 only from age 65 to age 80 (or beyond). While a pension plan may offer actuarially reduced benefits (to account for a longer expected term of payment) or even provide higher early retirement benefits (to encourage workforce turnover), the offer cannot be a guarantee of payment from the earliest eligibility date that creates "vested" rights from that date forward.
Apart from thousands of belated disability claims, the Ninth Circuit rules create "vested" rights for any participant who reaches retirement age, but waits to retire (to earn more wages and increase savings, reduce or eliminate an early retirement reduction, avoid an offset or reduction for unemployment, disability insurance, or worker's compensation benefits, or other reasons) and dies before actual retirement or after receiving less than the maximum lifetime benefits. With 20/20 hindsight, the participant (or his estate) can then claim guaranteed payment of benefits back to his or her earliest eligibility date. In the words of Samaroo v. Samaroo, 193 F.3d 185, 190 (3d Cir. 1999), the Ninth Circuit ruling ". . . [a]llowing [a participant] to change the operative facts after he has lost the gamble [on life expectancy] would wreak actuarial havoc on administration of [pension plans.]"
Employee benefit plans cannot keep records and be funded properly if there are no time limits on claims or retroactive payments. The Court should grant certiorari.
RICHAED B. SIGMUND KENT CPEEK (Counsel of Record) JENNINGS SIGMUND, P.C. The Penn Mutual. Towers 510 Walnut Street, 16th Floor Philadelphia, PA 19106 Email: kcprek@jslex.com Telephone: (215) 351-0615