Source: http://dc.findacase.com/research/wfrmDocViewer.aspx/xq/fac.19830520_0000097.DDC.htm/qx
Timestamp: 2017-06-25 00:20:36
Document Index: 538771365

Matched Legal Cases: ['§ 1001', '§ 302', '§ 186', '§ 2', '§ 203', '§ 203', '§ 204', '§ 203', '§ 203', '§ 1053', '§ 2', '§ 203', '§ 203', '§ 2']

| STEWART v. NATIONAL SHOPMEN PENSION FUND
STEWART v. NATIONAL SHOPMEN PENSION FUND
GEORGE STEWART, et al., Plaintiffs,
NATIONAL SHOPMEN PENSION FUND, et al., Defendants
MEMORANDUM OPINION UNITED STATES DISTRICT JUDGE CHARLES R. RICHEY. This matter is before the Court on cross motions for summary judgment, which have been fully briefed and argued. Plaintiffs contend that defendants have taken actions that violate the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., and § 302(c)(5) of the Taft-Hartley Act, 29 U.S.C. § 186(c)(5), and which have resulted in injury to a class of pension plan participants.
For the reasons set forth herein, the Court will grant plaintiffs' motion for summary judgment and provide the class the relief sought. BACKGROUND Plaintiff class is composed of all persons who have been or are participants in the National Shopmen Pension Plan, and who have received or are receiving benefits or whose benefit rights are or were otherwise vested under the plan, and whose past service credits have been reduced or eliminated by the Trustees as a result of their employer's or former employer's withdrawal from the Plan. However, the class does not include any individual who was a member of the class in Fentron Industries v. National Shopmen Pension Fund, 674 F.2d 1300 (9th Cir. 1982)(as defined at 1305 n.7). The class here consists of approximately 371 persons. The named plaintiffs are two individuals -- George Stewart and Lee Roy Warren -- who receive a pension from defendant National Shopmen Pension Fund (the "Fund").
Messrs. Stewart and Warren are entitled to pension benefits due to their years of service with Anchor Post Building Products ("Anchor") and pursuant to Anchor's collective bargaining agreement with the Shopmen's local union. Mr. Stewart was an employee at Anchor from 1940 until 1972, when he retired. Mr. Warren worked at Anchor's Maryland plant from 1959 until 1979 when Anchor closed that plant. Anchor joined the defendant Fund and began making contributions on behalf of its employees in 1969. At that time, Anchor's employees were granted pension credits for their years of service with their employer before joining the Fund. Thus, at the time of his retirement Stewart had 2.7 years of contributory service (service during years in which Anchor contributed to the Fund on his behalf) and 23 years of precontributory service (service before Anchor joined the Fund). Warren had 10.6 years of precontributory service and 10.4 years of contributory service. In 1979, when Anchor closed its Maryland plant, it ceased to contribute to the Fund. As was the usual procedure when an employer withdrew from the Fund, the Trustees ordered that an actuarial study be performed to determine the effect of the withdrawal upon the Fund. The study disclosed that Anchor's withdrawal "dumped" $750,000 of liability on the Fund. The study suggested that the Fund cancel all precontributory service credit given to Anchor employees in order to decrease this liability. The cancellation would not completely deprive any recipient of vested pension rights but it would decrease the amount of the pensions due to employees who had precontributory credit. The Trustees adopted the study's suggestion and cancelled all precontributory credit. They did so pursuant to § 2.09 of the National Shopmen Pension Plan.
As a result of the Fund's decision, Mr. Stewart's pension was reduced from $80/month to $9/month. Mr. Warren's pension suffered a reduction from $89.50/month to $45/month. Plaintiffs both appealed the decisions regarding their pensions to the Trustees of the Fund, but both appeals were denied. Consequently, plaintiffs filed this suit challenging the decision of the Fund's Trustees to cancel precontributory credit. Plaintiffs allege that the Trustees decision: 1) violated the vesting and nonforfeiture provisions of § 203 of ERISA; 2) violated § 203(c)(1)(B) of ERISA which provides that vesting schedule amendments trigger the right to choose to have benefits calculated under a Fund's pre-amendment plan;
3) constituted a decrease in their accrued benefits in violation of § 204(g) of ERISA; 4) was arbitrary and capricious in violation of ERISA's "sole and exclusive benefit" requirement; and 5) conflicted with the Plan's general vesting and nonforfeiture rules. Because the Court agrees with the second and third of plaintiffs' arguments, it need not reach the remainder of plaintiffs' contentions. I THE TRUSTEES' CANCELLATION OF THE PRECONTRIBUTORY CREDITS OF POST-ERISA PARTICIPANTS IS INVALID BECAUSE IT VIOLATES THE REQUIREMENTS OF ERISA § 203(c)(1)(B). Under ERISA § 203(c)(1)(B), 29 U.S.C. § 1053(c)(1)(B), if a plan is amended so as to change its vesting schedule, participants with at least five years of service must be permitted to elect to have their benefits calculated under the pre-amendment plan. It has been stipulated that the Trustees did not view their application of § 2.09 to cancel precontributory credits as a plan amendment changing the vesting schedule and therefore did not allow plan participants to exercise the option mandated by § 203(c)(1)(B). Thus, the only question is whether the Trustees' action constituted such an amendment. If the Court finds that the Trustees' action did constitute such an amendment, § 203(c)(1)(B) will clearly render their action invalid. A plan's vesting schedule delineates the timetable by which a participant's benefits will become vested i.e. nonforfeitable. The vesting schedule in the National Shopmen Pension Plan provided that benefits were to be nonforfeitable after 10 years of service. The Trustees contend that because they did not officially change this schedule, the action they took pursuant to § 2.09 was not a vesting schedule amendment. However, because the effect of defendants' actions was to alter the vested benefits of the plaintiffs, the Court holds that these actions do constitute a change in vesting schedule. &nbsp;This issue was addressed by the Ninth Circuit in Fentron Industries v. National Shopmen Pension Fund, 674 F.2d 1300 (9th Cir. 1982).
Dealing with the same plan at issue here and similar actions by the Trustees, the Circuit Court concluded that it was irrelevant "that the trustees' cancellation [did] not directly change the 1969 Plan vesting schedule . . . [so long as the cancellation] did change class members' vested rights." Id. at 1306. As stated by the Fentron court: "The Fund and its trustees cannot be permitted to ...