Source: https://law.justia.com/cases/federal/appellate-courts/F2/791/548/333127/
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Document Index: 464268496

Matched Legal Cases: ['§ 186', '§ 1001', '§ 1055', '§ 1132', '§ 1104', '§ 401', 'art 1', 'art 2', '§ 1292', '§ 1132', '§ 1001']

Josephine Kaszuk, Plaintiff-appellee, v. Bakery and Confectionery Union and Industry Internationalpension Fund, Defendant-appellant, 791 F.2d 548 (7th Cir. 1986) :: Justia
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Josephine Kaszuk, Plaintiff-appellee, v. Bakery and Confectionery Union and Industry Internationalpension Fund, Defendant-appellant, 791 F.2d 548 (7th Cir. 1986)
US Court of Appeals for the Seventh Circuit - 791 F.2d 548 (7th Cir. 1986)
Argued June 10, 1985. Decided May 23, 1986. Rehearing Denied June 20, 1986
Prior to 1976, the Fund, a labor-management trust fund established pursuant to Sec. 302(c) (5) of the Labor Management Relations Act, 29 U.S.C. § 186(c) (5) and the Employee Retirement Income Security Act, 29 U.S.C. §§ 1001-1461 [hereinafter referred to as ERISA], provided no pre-retirement pensions for the spouses of employees. In 1976, pursuant to Congressional mandate, see 29 U.S.C. §§ 1055, 1061(b), the Fund created a pre-retirement husband-and-wife pension. This pension provided benefits to an employee's spouse if the employee elected coverage before retiring. If an employee elected the pre-retirement husband-and-wife pension, the Fund reduced the employee's retirement benefit by an amount equal to .8% of the monthly benefit to which he was otherwise entitled multiplied by the number of years over which the option was elected. A participant's election did not become effective until two years after it was filed; however, the Fund waived the two-year waiting period for participants who died as the result of an accident after making their elections or who filed their elections by March 31, 1978. The new pension became available on June 1, 1976.
Brought under 29 U.S.C. § 1132, Mrs. Kaszuk's complaint alleged that Mr. Kaszuk failed to elect the pre-retirement pension only because the Fund failed to notify him adequately of the pre-retirement husband-and-wife pension's election procedures, that the Fund's failure to provide adequate notice violated fiduciary obligations set forth in ERISA, 29 U.S.C. § 1104, and that Mr. Kaszuk would have made the necessary election if the Fund had met its obligation of adequately notifying him. Mrs. Kaszuk requested:
Neither party raised the issue of jurisdiction in its briefs or arguments. Nevertheless, federal appellate courts do "not acquire subject matter jurisdiction by the consent of the parties, ... we have an independent obligation to police the constitutional and statutory limitations on our jurisdiction, ..." Minority Police Officers Association of South Bend v. City of South Bend, Indiana, 721 F.2d 197, 199 (7th Cir. 1983) (citations omitted), and "an independent obligation to make sure we do not exceed it." A/S Apothekernes Laboratorium For Specialpraeparater v. I.M.C. Chemical Group, Inc., 725 F.2d 1140 (7th Cir. 1984). Consistent with these maxims, this Court raised the issue of jurisdiction at oral argument and the parties' counsels, who have a professional obligation to assist the Court in determining the question of jurisdiction, Minority Police Officers Association, 721 F.2d at 199, filed briefs on the matter.
The district court's partial judgment, entered on March 10, 1985, under Rule 54(b), held that Mrs. Kaszuk is entitled to benefits but did not dispose of her request for pre-judgment interest. It therefore did not finally adjudicate her entitlement to damages. A decision that fixes liability but not damages is not appealable, despite the entry of an order under Rule 54(b). Liberty Mutual Insurance Co. v. Wetzel, 424 U.S. 737, 96 S. Ct. 1202, 47 L. Ed. 2d 435 (1976). There is no material difference between an order that leaves all damages issues open (as in Liberty Mutual) and an order that leaves one, important damages issue open (this case). In either event the order is not a final disposition of a claim and does not meet the standards of Rule 54(b).
Because the initial judgment was not final, the first (and only) final judgment was entered on August 2, 1985. The judgment of August 2 disposed of the request for prejudgment interest. It also restated and increased the amount of back pension benefits due Mrs. Kaszuk, ordered the Fund to pay future benefits, and directed the Fund to notify other potential claimants. This judgment is the subject of appeal No. 85-2385, which gives us jurisdiction to hear the entire case. "Until the district court enters judgment on a 'separate document' within the meaning of Fed. R. Civ. P. 58, a party is free to accumulate issues. An appeal from the Rule 58 'separate document' at the end of the case brings up the whole case, even if the document was entered long after the opinion or order disposing of the issues the party now seeks to raise on appeal." Exchange National Bank v. Daniels, 763 F.2d 286, 290 (7th Cir.), reheard in part on other grounds, 768 F.2d 140 (1985).
Appeal No. 85-2385 thus enables us to hear every issue properly preserved in the district court. Because the whole case is before us on appeal No. 85-2385, we dismiss No. 85-1513 as redundant. We need not decide when, if ever, the entry of a final judgment will revive a notice of appeal that is ineffectual because premature, as No. 85-1513 was premature. Compare Stevens v. Turner, 222 F.2d 352 (7th Cir. 1955), with Sandidge v. Salen Offshore Drilling Co., 764 F.2d 252, 255 (5th Cir. 1985). It would be necessary to decide this issue only if there had been no timely appeal from the final judgment. Appeal No. 85-2385 is timely, making it inappropriate to decide this additional question.
Pfeil v. Rogers, 757 F.2d 850, 863 (7th Cir. 1985) (quoting Munson v. Friske, 754 F.2d 683, 690 (7th Cir. 1985) (citations omitted)).
In 1974, ERISA made substantial changes in the qualification requirements for employee pension plans under 26 U.S.C. §§ 401(a), 403(a), and 405(a). On November 5, 1975, the Internal Revenue Service [hereinafter referred to as IRS] and the Department of Labor [herinafter referred to as DOL] issued a compendium of rules and regulations (the ERISA Guidelines) " [i]n recognition of the need to provide an immediate and complete set of interim guidelines to facilitate (1) adoption of new employee plans, and (2) prompt amendment of existing employee plans, in conformance with the requirements of the Code as amended by ERISA, ...." Rev.Pro. 76-31, 1976-2 C.B. 649. Plans adopted or amended to meet the new ERISA qualification requirements could rely on the ERISA Guidelines until December 31, 1977. Id. at 651. However, in unusual circumstances, the IRS and the DOL reserved the right to issue rules and regulations amending or supplementing the ERISA Guidelines prior to December 31, 1977. These rules or regulations would apply to pension plans no sooner than thirty days after their publication. Id.
(iii) Information to be provided by plan administrator. (A) The plan administrator must furnish to the participant a written notification in nontechnical terms of the availability of the election provided by this subparagraph, within a reasonable amount of time after the first day of the election period. This notification shall also inform the participant of the availability of the information specified in subdivision (iii) (B) of this subparagraph.
Treas.Reg. 11.401(a)-11(d) (3) (iii). Subdivision (iii) (B) requires a plan administrator to supply additional information to a participant who requests it.
Permanent regulations appeared in the Federal Register on January 7, 1977. T.D. 7458, 42 Fed.Reg. 1463 (Jan. 7, 1977).2 The introductory remarks accompanying the permanent regulations state that " [t]hese regulations supersede temporary regulations Sec. 11.401(a)-11 ..." and that they "are adopted and inserted immediately after Sec. 401-14." Id. at 1464. The explicitness of this language indicates the IRS's intention to have the permanent regulations be effective immediately. We therefore disagree with the court in United Paper Workers International Union v. Pension Plan For Bowater Southern Paper Corp., which held that Treas.Reg. Sec. 11.401(a)-11 governed until January 1, 1978. 2 Employee Benefits Cases (BNA) 1154, 1160 (E.D. Tenn. 1981). However, we will consider whether the Fund met the notice requirements set forth in the ERISA Guidelines before February 6, 1977 because the permanent regulations did not become effective until that date. Between June 1, 1976, the effective date of the pre-retirement husband-and-wife pension, and February 6, 1977, the Fund provided Mr. Kaszuk notice by stacking booklets containing all the Fund's rules and regulations at various locations in the Nabisco plant and by placing a one and one-half page advertisement on the next to the last page of the October 1976 B & C News.
"The entire statutory scheme of ERISA demonstrates Congress' overriding concern with the protection of plan beneficiaries, and we would be reluctant to construe narrowly any protective provisions of the Act." Leigh v. Engle, 727 F.2d 113, 126 (7th Cir. 1984); see also S.Rep. No. 127, 93d Cong., 2d Sess., reprinted in 1974 U.S.Code Cong. & Ad.News 4838, 4854. Both the Senate and the House Reports accompanying the bill state that
We next examine whether the Fund met the notice requirements contained in the permanent regulations found at 26 C.F.R. Sec. 1.401(a)-11(c) (3) which provide in pertinent part:
(3) Information to be provided by plan administrator. (i) A plan which is required to provide either or both of the elections described in paragraph (c) (1) or (2) of this section must provide to the participants, at the time and in the manner specified in subdivision (ii) of this subparagraph, the following information, as applicable to the plan, in written nontechnical language:
(B) In the case of the election described in paragraph (c) (2) of this section, a general description of the early survivor annuity, the circumstances under which it will be paid if elected, and the availability of such election; and
(ii) The method or methods used to provide the information described in subdivision (i) of this subparagraph may vary. See Sec. 1.7476-2(c) (1) for examples of methods which can be used. One or more methods may be used to provide the required information provided that all of the required information is provided by one method or a combination of methods by or within the time period specified in this subdivision (ii).... If a method other than mail or personal delivery is used to provide participants with some or all of such information, if (sic) must be a method which is reasonably calculated to reach the attention of a participant on or about the date prescribed in the immediately preceding sentence and to continue to reach the attention of such participant during the election period applicable to him for which the information is being provide (sic) (as, for example, by permanent posting, repeated publication, etc.).
C.F.R. Sec. 1.7476-2(c) (1) provides in pertinent part: "... notice shall be given in person, by mailing, by posting, or by printing it in a publication of ... an employee organization which is distributed in such a manner so as to be reasonably available to such employee."
The Fund attempts to stretch the meaning of "mailing" in 26 C.F.R. Sec. 1.7476-2(c) (1) to include its advertisements in the B & C News which were mailed to the homes of its participants. However, we agree with the district court that "notice ... by mailing....", id., means the mailing of individual notices rather than placing an advertisement in a publication that is mailed. If the Fund's construction of the term "mailing" is accurate, the IRS would have had no reason to include "notice ... by printing it in a publication of ... an employee organization which is distributed ...," id., in the regulation as an alternate method of giving notice.
Further, the Fund's two advertisements in the B & C News did not constitute a method of notification "which is reasonably calculated to reach the attention of a participant ..." throughout the election period. 26 C.F.R. Sec. 1.401(a)-11(c) (3) (ii). While 26 C.F.R. Sec. 1.7476-2(c) (1) lists printing in a publication of an employee organization as an acceptable means of notice, 26 C.F.R. Sec. 1.401(a)-11(c) (3) (ii) suggests that repeated publication is necessary to reach plan participants throughout their election periods. Two notifications, some fourteen months apart, during the twenty-two month period in which Mr. Kaszuk could have elected the pre-retirement pension and avoid the two-year waiting period, fail to qualify as a method of notice reasonably calculated to reach the attention of plan participants throughout the election period.
Finally, the Fund's stacking of its "Rules and Regulations" booklets at various locations in the Nabisco plant in 1976 and 1977, and its "Summary Description Booklet" in 1978, does not constitute an acceptable method of providing notification to plan participants. In reaching this conclusion, we look for direction to " [t]he general disclosure requirements set forth at 29 C.F.R. Sec. 2520.104(b)-1 [which] provide guidelines for proper distribution of materials." Staats v. Ohio River Company, 570 F. Supp. 22, 24 (W.D. Pa. 1983), aff'd, 735 F.2d 1351 (3d Cir. 1984). Those general disclosure requirements state that, "in no case is it acceptable merely to place copies of the material in a location frequented by participants." 29 C.F.R. Sec. 2520.104b-1(b). While this prohibition appears in a labor regulation directed at Part 1 of ERISA, rather than Part 2 under which the instant case arises, it does reflect the general purposes of disclosure to, and effective communication with, plan participants contained throughout ERISA. See S.Rep. No. 127, supra p. 12, H.R.Rep. No. 533, supra p. 13. We therefore find the Fund's distribution of the various rules booklets to be an inadequate form of notice of the pre-retirement husband-and-wife pension. In sum, we agree with the district court: "the Fund failed in every way to comply with the regulation it allegedly relied on." Kaszuk v. Bakery and Confectionery Union, 638 F. Supp. 365, 370 (N.D. Ill. 1984) (Memorandum and Order granting partial summary judgment to plaintiff).
Kaszuk, No. 83 C 1177, slip op. at 3 (N.D. Ill. Feb. 11, 1985) (citation omitted) (memorandum opinion granting summary judgment to plaintiff on the issues of actual notice and Mr. Kaszuk's election in the event of notice). The Fund did not contest this evidence.
Summary judgment should be granted when "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). According to the Supreme Court, the party seeking summary judgment bears the burden of persuading the court that no issue of material fact exists. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 ... [90 S. Ct. 1598, 1608, 26 L. Ed. 2d 142] (1970); United States v. Diebold, Inc., 369 U.S. 654, 655 [82 S. Ct. 993, 994, 8 L. Ed. 2d 176] ... (1962) (per curiam). See Herman v. National Broadcasting Co., 744 F.2d 604, 607 (7th Cir. 1984). In determining whether an issue of material fact exists, the court must construe the facts alleged in the light most favorable to the party opposing the motion for summary judgment. Id. See Trulson v. Trane Co., 738 F.2d 770, 771 (7th Cir. 1984).
Janowiak v. Corporate City of South Bend, 750 F.2d 557, 559 (7th Cir. 1984), petition for cert. filed, 53 U.S.L.W. 3896 (U.S. June 25, 1985) (No. 84-1936). The non-moving party receives the benefit of all inferences that may reasonably be drawn in his favor. Hermes v. Hein, 742 F.2d 350, 353 (7th Cir. 1984). A moving party may file affidavits in support of his motion for summary judgment and shift to the non-moving party the burden of showing that an issue of material fact exists. Bowers v. DeVito, 686 F.2d 616, 617 (7th Cir. 1982) (citing Faulkner v. Baldwin Piano & Organ Co., 561 F.2d 677, 683 (7th Cir. 1977), cert. denied, 435 U.S. 905, 98 S. Ct. 1450, 55 L. Ed. 2d 495 (1978)); Fed. R. Civ. P. 56(c). While the non-moving party may not avoid summary judgment by baldly asserting the existence of a disputed question of fact, Atchison, Topeka and Santa Fe Railway Company v. United Transportation Union, 734 F.2d 317, 320 (7th Cir. 1984) (citations omitted), the Federal Rules do not require him to submit any evidence in opposition to a motion for summary judgment. Failure to submit such evidence "leads only to the court's acceptance as true of the facts set forth in the [movant's] affidavits...." Wang v. Lake Maxinhall Estates, Inc., 531 F.2d 832, 835 n. 10 (7th Cir. 1976) (citations omitted). The court has no obligation to comb the record for evidence contradicting the movant's affidavits. Lawson v. Sheriff of Tippecanoe County, Indiana, 725 F.2d 1136, 1139 (7th Cir. 1984).
When the Fund filed its original notice of appeal, many matters remained before the district court. At best, the Fund had appealed an interlocutory order pursuant to 28 U.S.C. § 1292; at worst, the Fund had appealed a nonappealable order. In either case, the district court retained jurisdiction to grant the injunctive relief. See Taylor v. Sterrett, 640 F.2d 663, 668 (5th Cir. 1981) (citing 9 J. Moore, B. Ward & J. Lucas, Moore's Federal Practice Sec. 203.11 at 3-54 (2d ed. 1980)) ("where an appeal is allowed from an interlocutory order, the district court may still proceed with matters not involved in the appeal."); Patzer v. Board of Regents of the University of Wisconsin System, 763 F.2d 851, 859 (7th Cir. 1985) (citation omitted) (district court not divested of jurisdiction "when there is a purported appeal from a non-appealable order.").
Failure to amend the pleadings under Rule 15 does not fatally flaw a request for relief made late in a judicial proceeding. Southwestern Investment Company v. Cactus Motor Company, Inc., 355 F.2d 674, 678 (10th Cir. 1966) (citations omitted). Rule 54(c) provides, in pertinent part, that " [e]xcept as to a party against whom a judgment is entered by default, every final judgment shall grant the relief to which the party in whose favor it is rendered is entitled, even if the party has not demanded such relief in his pleadings." Rule 15(b) provides that failure to amend the pleadings to request relief not previously demanded does not affect the granting of such relief.
Rule 54(c) " 'has been liberally construed, leaving no question that it is the court's duty to grant whatever relief is appropriate in the case on the facts proved.' " United States v. Marin, 651 F.2d 24, 31 (1st Cir. 1981) (quoting Robinson v. Lorillard Corporation, 444 F.2d 791, 802-03 (4th Cir.), cert. dismissed, 404 U.S. 1006, 92 S. Ct. 573, 30 L. Ed. 2d 655 (1971)) (citing Columbia Nastri & Carta Carbone v. Columbia Ribbon & Carbon Manufacturing Co., 367 F.2d 308, 312 (2d Cir. 1966)). This includes injunctive relief when appropriate, see Kahan v. Rosenstiel, 424 F.2d 161, 174 (3d Cir.), cert. denied, 398 U.S. 950, 90 S. Ct. 1870, 26 L. Ed. 2d 290 (1970), and even when not specifically requested. Fast v. School District of City of Ladue, 728 F.2d 1030, 1033 (8th Cir. 1984); Morrow v. South, 540 F. Supp. 1104, 1111 (S.D. Ohio 1982). A district court's duty to grant "whatever relief is appropriate" does have some limitations. When such relief would prejudice the opposing party, the district court ought not grant it. Albemarble Paper Co. v. Moody, 422 U.S. 405, 424, 95 S. Ct. 2362, 2374, 45 L. Ed. 2d 280 (1975); Engel v. Teleprompter Corporation, 732 F.2d 1238, 1242 (5th Cir. 1984); Atlantic Purchasers, Inc. v. Aircraft Sales, Inc., 705 F.2d 712, 716 (4th Cir.), cert. denied, 464 U.S. 848, 104 S. Ct. 155, 78 L. Ed. 2d 143 (1983). "In particular, a substantial increase in the defendant's potential ultimate liability can constitute specific prejudice barring additional relief under Rule 54(c)." Atlantic Purchasers, Inc., 705 F.2d at 716-17 (citations omitted).
But the standard of review will be the familiar one of whether the District Court was "clearly erroneous" in its factual findings and whether it "abused" its traditional discretion to locate "a just result" in light of the circumstances peculiar to the case, Langnes v. Green, 282 U.S. 531, 541 [51 S. Ct. 243, 247, 75 L. Ed. 520] (1931).
Albemarble Paper Co., 422 U.S. at 424-25, 95 S. Ct. at 2374-75.
Under ERISA, " [a] civil action may be brought ... by a participant, beneficiary, or fiduciary ... to obtain other appropriate equitable relief ... to enforce any provision of this subchapter [subchapter I--Protection of Employee Benefit Rights] or the terms of the plan...." 29 U.S.C. § 1132(a) (3) (B) (ii). As a beneficiary of the Fund, Mrs. Kaszuk may properly bring this action to enforce the notice requirements of ERISA. We turn to the only remaining question: Whether this is appropriate equitable relief.
Congress declared that the policy of ERISA is "to protect ... the interests of participants in employee benefit plans and their beneficiaries, by requiring the disclosure and reporting to participants and beneficiaries of financial and other information with respect thereto...." 29 U.S.C. § 1001(b). In cases such as this, "where the district court is affirmatively charged with effectuating the purposes of a remedial statute, its discretion in fashioning an appropriate remedy runs wide." N. Hess' Sons, Inc. v. Hess Apparel, Inc., 738 F.2d 1412, 1414 (4th Cir. 1984) (citations omitted) (action under the Lanham Act). We may review the district court's fashioning of its remedy only for an abuse of discretion in light of the circumstances of this case. Prohosky v. Prudential Insurance Company of America, 767 F.2d 387, 391 (7th Cir. 1985).
Kaszuk, No. 83 C 1177, slip op. at 2 (N.D. Ill. Aug. 2, 1985) (Order specifying injunctive relief). The district court directed that the required letter inform recipients that they could contact either the Fund or Mrs. Kaszuk's attorneys for further information. See id. at App.A. A review of the evidence indicates that the district court has awarded injunctive relief which is broader than that allowed by the circumstances of the case.
The IRS proposed the permanent regulations on October 3, 1975. Qualified Joint and Survivor Annuities, Proposed Rulemaking. The IRS held public hearings on February 26, 1976, and issued the permanent regulations on January 7, 1977. An October 4, 1977 amendment "affect [ed] some qualified plans which provide benefits by distributing individual annuity contracts to participants and postpone [d] from July 1, 1977 to January 1, 1978, the date by which some participants must be given an opportunity to have amendments made to their contracts." 42 Fed.Reg. 53,956. Because the Fund does not distribute individual annuity contracts, neither special effective date affected it