Source: https://law.justia.com/cases/federal/appellate-courts/F2/821/461/255642/
Timestamp: 2020-07-02 22:01:00
Document Index: 547798543

Matched Legal Cases: ['§ 1053', '§ 401', '§ 1331', '§ 1132', '§ 1132', '§ 1051', '§ 1053', '§ 1053']

Thomas J. Redmond, Jr., Appellant, v. Burlington Northern Railroad Company Pension Plan;burlington Northern Railroad Company, a Corporation; Andthe First Trust Company of St. Paul As Trustee for Theburlington Northern Railroad Company Pension Plan, Appellees, 821 F.2d 461 (8th Cir. 1987) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Eighth Circuit › 1987 › Thomas J. Redmond, Jr., Appellant, v. Burlington Northern Railroad Company Pension Plan;burlington N...
Thomas J. Redmond, Jr., Appellant, v. Burlington Northern Railroad Company Pension Plan;burlington Northern Railroad Company, a Corporation; Andthe First Trust Company of St. Paul As Trustee for Theburlington Northern Railroad Company Pension Plan, Appellees, 821 F.2d 461 (8th Cir. 1987)
US Court of Appeals for the Eighth Circuit - 821 F.2d 461 (8th Cir. 1987) Submitted May 13, 1987. Decided June 8, 1987. Rehearing Denied July 15, 1987
On appeal, appellant claims, first, that, under a correct interpretation of the railroad's pension plans, he is entitled to benefits for all his years of service; second, that appellees' interpretation of the plans does not comply with Sec. 203(b) (1) (F) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1053(b) (1) (F) (1982); third, that there is a genuine issue of material fact as to whether appellees' allegedly nonuniform application of the pension plans' break in service rules constituted arbitrary treatment of appellant; and, fourth, that appellant was denied effective discovery with respect to his claim of arbitrary treatment.
The 1969 and 1970 Plans contained the same provisions regarding "continuous service" and "break [s] in continuous service" as did the 1951 Plan, with one exception: the 1969 and 1970 Plans applied retroactively a new rule that resignation followed by reinstatement within one year did not constitute an "interruption of continuous service".
Appellant commenced the instant action in January 1985. Jurisdiction was based on 26 U.S.C. §§ 401, 411 (1982), 28 U.S.C. § 1331 (1982), and 29 U.S.C. § 1132(a) and (e) (1982). In May 1985, the district court ordered that all discovery be completed by March 3, 1986. In May 1986, the railroad filed a motion for summary judgment on behalf of all appellees. Appellant opposed the motion and cross moved for summary judgment.
In this Circuit it is well established that " [c]laimants for benefits under private pension plans may obtain judicial review of denials of their claims under section 502 of ERISA [29 U.S.C. § 1132]. Federal courts may overturn a decision of private pension fund fiduciaries only if the decision is arbitrary, capricious or an abuse of discretion." Lawrence v. Westerhaus, 780 F.2d 1321, 1322 (8th Cir. 1985). Accord, Bueneman v. Central States, Southeast and Southwest Areas Pension Fund, 575 F.2d 1208, 1209 (8th Cir. 1978).
Appellant argues that, since the term " [u]ninterrupted service" is not defined by the 1975 Plan (or by any succeeding plan), appellees acted arbitrarily and capriciously in concluding that appellant's first and second periods of service were not " [u]ninterrupted" by his three-year break in service. This argument is without merit. Webster's Third New International Dictionary defines "uninterrupted" as "continuous".4 Appellees concluded that two periods of service interrupted by a break in service of three years are not continuous. That conclusion was neither arbitrary nor capricious; rather, it appears to have been compelled by the unambiguous language of the Plan.
Appellant's second argument is based on the version of section 3.4 set forth in the 1979 Plan. The 1979 Plan's version of section 3.4(c) changes "Uninterrupted service" to "Uninterrupted periods of service" (emphasis added). Appellant argues that, since he has two uninterrupted "periods" of service, he is entitled to benefits for both, despite his break in service. We disagree. Such an interpretation of section 3.4(c) would be inconsistent with section 3.2(a) of the 1979 Plan, which provides that "the Participant's last period of continuous employment with the Employer prior to the Effective Date shall be counted as "Credited Service". A more reasonable interpretation of section 3.4(c)--the interpretation adopted by appellees--is that the plural form of "period" refers to the list of items to be included as credited service under all the subdivisions of section 3.4(c); that is, a single participant could have a period of service each as a union employee (section 3.4(c) (1)), in the employ of a subsidiary of the railroad (section 3.4(c) (2)), and in railroad service for the benefit of and with, or at, the direction of the railroad (section 3.4(c) (3)). It is not an arbitrary or capricious interpretation of section 3.4(c) to conclude that such "periods" of service count as credited service as long as, in the aggregate, they are "uninterrupted".
Section 203(b) (1) (F) of ERISA provides in relevant part:
(F) years of service before this part [29 U.S.C. § 1051 et seq.] first applies to the plan if such service would have been disregarded under the rules of the plan with regard to breaks in service, as in effect on the applicable date; ...."
29 U.S.C. § 1053(b) (1) (F) (emphasis added). In other words, ERISA provides that all years of service count towards benefits unless the pre-ERISA plan contains rules excluding years of service preceding a break in service. As shown above, all of the railroad's plans--both before and after the effective date of ERISA--had break in service rules which precluded benefits for appellant's first period of service.
Appellant makes several arguments, however, to support his claim that Sec. 1053(b) (1) (F) is inapplicable to the railroad's pension plans and therefore that appellees' interpretation of the plans violates the general rule of inclusion stated in Sec. 1053(b) (1).
First, appellant argues that Sec. 1053(b) (1) (F) is applicable only if the post-ERISA plans specifically incorporate the break in service rules of the pre-ERISA plans. Appellant interprets Sec. 1053(b) (1) (F) to require a specific statement of incorporation in the plan such as: "Breaks in service occurring prior to ERISA shall be governed by the rule as to such breaks contained in the pre-ERISA plan." Appellant's argument finds no support in the language of the statute, its legislative history, or the case law on which appellant relies.
Clearly, the language of Sec. 1053(b) (1) (F) does not require a specific statement of incorporation. It merely permits application of pre-ERISA break in service rules to post-ERISA plans. Appellant's argument would be meritorious, therefore, only if the legislative history provided support for the interpretive gloss he invites us to apply. It does not. The only relevant history is found in H.R. Conf. Rep. No. 93-1280, 93d Cong., 2d Sess., reprinted in 1974 U.S. Code Cong. & Ad. News 5052 (emphasis added):
The Conference Report, in accordance with the statutory language, says nothing more than application of a pre-ERISA rule may be allowed. See Ponce v. Construction Laborers Pension Trust, 628 F.2d 537, 541 (9th Cir. 1980) ("ERISA specifically permits a pension plan to give effect to a break in service that occurred prior to January 1, 1976.") (dictum) (emphasis added) (citing 29 U.S.C. § 1053(b) (1) (F)).
Appellant places primary reliance on Snyder v. Titus, 513 F. Supp. 926 (E.D. Va. 1981), to support his specific incorporation argument. There, a participant in the employer's 1959 pension plan had incurred two breaks in service before 1959. Under the 1959 plan, the participant was not entitled to benefits for his service preceding his breaks in service. The first post-ERISA plan--the one in effect at the time the participant retired--explicitly defined break in service as a certain disruption in service occurring after the effective date of the 1959 plan. Snyder, supra, 513 F. Supp. at 931. The employer sought to apply the provisions of the 1959 plan to deny benefits to the participant for his service preceding his break in service. The court, in granting summary judgment in favor of the participant, stated:
" [T]he Court concludes that nothing ... prohibits a plan from expressly providing that a break in service in years prior to the effective date of ERISA shall be governed by the rule in effect at the time of the alleged hiatus from covered employment. Indeed, the Court believes that it was the intent of Congress in Sec. 1053(b) (1) (F) to permit the adoption of such express provisions in post-ERISA pension plans. The Court does not believe that Congress intended to permit this in the manner attempted by the Trustees here--by positing that a gap exists and then filling the gap by interpretation harkening back to a pre-ERISA plan. The break in service rule must be expressly stated so that there is no room for an arbitrary and capricious interpretation as to which rule governs a particular period of employment. Otherwise, trustees would be able, as in this case, to dig up break in service rules from old and discarded plans to deny pension applications, thus disappointing the reasonable expectations of pensioners....
Because the 1976 plan does not expressly provide that pre-1959 breaks in service shall be governed by the rule in the 1959 plan, the Court concludes that Sec. 1053(b) (1) (F) does not permit the Trustees to disregard defendant's years of covered employment prior to 1954 and in 1957 under their interpretation of the 1959 break in service rule."
Snyder, supra, 513 F. Supp. at 937 (footnote omitted) (emphasis in original).
We do not believe that the analysis in Snyder compels the result urged by appellant in the instant case. True, the final sentence quoted above might appear to require a specific statement of incorporation. Other language in the opinion, however, supports the proposition that Sec. 1053(b) (1) (F) is satisfied if the post-ERISA plans explicitly state a break in service rule for pre-ERISA breaks that has the same effect as the rule stated in the pre-ERISA plans. Snyder, supra, 513 F. Supp. at 937 ("The break in service rule must be expressly stated"). Unlike the instant case, the post-ERISA plan in Snyder treated the participant's pre-ERISA breaks in service differently than they had been treated in the pre-ERISA plan.
We hold that Sec. 1053(b) (1) (F) does not require the specific statement of incorporation urged by appellant.
Second, appellant argues that, even if Sec. 1053(b) (1) (F) does not require a specific statement of incorporation, the railroad's pension plans do not pass muster under the statute because the pre-ERISA and post-ERISA pension plans state different rules regarding breaks in service. This argument is without merit. As stated above, appellant's break in service bars benefits for his first period of service under each of the railroad's pension plans. True, the pre-ERISA and post-ERISA plans use different language in their break in service rules. The result of those rules vis-a-vis appellant, however, is the same under each of the plans. We do not read Sec. 1053(b) (1) (F) to require anything more.
Nor are we persuaded by appellant's argument that Sec. 1053(b) (1) (F) does not apply since the post-ERISA plans contain different rules for pre-ERISA and post-ERISA breaks in service. Rather, that was precisely what Congress had in mind when it enacted Sec. 1053(b) (1) (F). See Snyder, supra, 513 F. Supp. at 937; see also Dudo v. Schaffer, 551 F. Supp. 1330, 1340 (E.D. Pa. 1982), aff'd mem., 720 F.2d 661 (3d Cir. 1983).
Finally, appellant argues that the word "uninterrupted" in section 3.4(c) of the 1975, 1979, and January 1981 Plans cannot be given its ordinary dictionary meaning of "continuous" because then section 3.4(c) would violate Sec. 1053(b) (3) (B). That section of ERISA, which sets forth the so-called "rule of parity", requires that an employee's years of service before any one-year break in service be taken into account if the number of consecutive one-year breaks are less than the aggregate number of years of service prior to the break. Appellant does not argue that appellees' interpretation of the plans violates the rule of parity, nor could he since Sec. 1053(b) (3) (B) applies only to post-ERISA breaks in service. E.g., Haeberle v. Board of Trustees, 624 F.2d 1132, 1137 (2d Cir. 1980); Dudo, supra, 551 F. Supp. at 1340. Rather, appellant argues that "uninterrupted" cannot mean "continuous" since some noncontinuous service should be credited under the rule of parity. We are not persuaded. While we agree that language in post-ERISA plans should be read, when possible, to comply with ERISA, such a reading in the instant case has no bearing on the result: whether or not service is "uninterrupted" by breaks in service covered by the rule of parity, appellant is not entitled to benefits for his service preceding a three-year pre-ERISA break in service.
Appellant also claims that he was denied effective discovery and as a result was unable fully to develop his claim of arbitrary treatment. Appellant complains of "delays" by appellees and their "refusal to allow copying to facilitate examination of the limited documents that were finally made available". While we agree that a party must have an adequate opportunity to develop his claims through discovery before summary judgment is appropriate, appellant's claim rings hollow. Not once during 14 months of discovery did appellant request an order to compel discovery or for an extension of time. Cf. Celotex Corp. v. Catrett, 106 S. Ct. 2548, 2554-55 (1986) (premature summary judgment motions can be dealt with by applying under Fed. R. Civ. P. 56(f) for additional time to conduct necessary discovery).
We hold that appellees' interpretation of the railroad's pension plans so as to deny appellant pension benefits for his first period of service was neither arbitrary nor capricious. We also hold that that interpretation complies in every respect with Sec. 203(b) (1) (F) of ERISA. We further hold that there is no genuine issue of material fact as to whether the railroad's pension committee acted arbitrarily in denying appellant benefits. Finally, we hold that appellant's claim that he was denied effective discovery is without merit.
First and Second Period Second Periods of Service of Service (22 years, 11 (34 years, 5 months) months) -------------- --------------- January 1, 1983 to March 16, 1987 $534.21 $837.00 After March 16, 1987 $217.40 $361.20