Opinion ID: 6496026
Heading Depth: 3
Heading Rank: 2

Heading: District Court's Denial of Arbitration

Text: On August 7, 2020, the Union filed a complaint in the United States District Court for the District of Massachusetts - 11 - alleging two causes of action. The Union brought Count I pursuant to the Taft-Hartley Act and the FAA seeking to compel arbitration under the CBA. The Union brought Count II pursuant to the FAA seeking to compel arbitration under the BGC Pension Plan.3 The defendants moved to dismiss the complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and (b)(6). On September 28, 2021, the district court granted the motion and dismissed the complaint. United Steel, 2021 WL 4441214, at . As to Count I, the court held that the pension grievances were not arbitrable under the CBA. Id. at . As to Count II, the court held that the JPC did not have authority to rule on the grievances, and, therefore, the arbitration provision set forth in Section 12.025 of the BGC Pension Plan was inapplicable. Id. at . The 3 The Union has standing to bring suit to compel arbitration under Section 12.025 of the BGC Pension Plan. The Union meets the three requirements for standing as outlined by the Supreme Court: (1) it suffered an injury in fact because of its inability to arbitrate the dispute on behalf of its members; (2) the injury is causally connected to the Company's refusal to arbitrate; and (3) the injury will be redressed by a favorable decision. See Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61 (1992). The Company's argument that only JPC members may refer disputes to arbitration incorrectly reads the language of the BGC Pension Plan, which provides under Section 12.025 that [i]n the event that the members of a Joint Pension Committee cannot settle any dispute, . . . the whole matter will be referred to arbitration. The BGC Pension Plan is ambiguous as to who refers the matter to arbitration and places no limitations on who may sue to compel arbitration. - 12 - court further held that [t]he Plan Administrator's determination to this effect was not arbitrary and capricious. Id. The Union timely appealed the district court's holding as to Count II. The Union has not appealed the district court's dismissal of Count I. II. Clear Delegations of Discretionary Authority to the JPC The governing law is well established. The Supreme Court has held that a challenge to the denial of benefits is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). We have long recognized that the threshold question in determining the standard of review is whether the provisions of the benefit plan at issue 'reflect a clear grant of discretionary authority to determine eligibility for benefits.' Gross v. Sun Life Assur. Co. of Can., 734 F.3d 1, 13 (1st Cir. 2013) (emphasis in original) (quoting Leahy v. Raytheon Co., 315 F.3d 11, 15 (1st Cir. 2002)). The authority must be expressly provided for, see Rodriguez-Abreu v. Chase Manhattan Bank, N.A., 986 F.2d 580, 583– 84 (1st Cir. 1993), and the plan must offer more than subtle inferences, Gross, 734 F.3d at 16. Where a pension plan makes such a clear grant of authority, the administrator's decision will be upheld unless it is arbitrary, capricious, or an abuse of - 13 - discretion. Stephanie C. v. Blue Cross Blue Shield of Mass. HMO Blue, Inc., 813 F.3d 420, 427 (1st Cir. 2016). Further, ERISA allows named fiduciaries to delegate responsibilities (other than trustee responsibilities) through express procedures provided in the plan. Rodriguez-Abreu, 986 F.2d at 584. For a proper delegation of authority, the delegation must be clear and the fiduciary must properly designate a delegate for the fiduciary's discretionary authority. Rodríguez-López v. Triple-S Vida, Inc., 850 F.3d 14, 19, 22-23 (1st Cir. 2017). An ERISA plan may also delegate discretionary authority to a neutral arbitrator to break deadlocks. See Atkins v. Bert Bell/Pete Rozelle NFL Player Ret. Plan, 694 F.3d 557, 568-69 (5th Cir. 2012) ([T]he Supreme Court and this court have reinforced the propriety of plan administrators' utilization of a neutral arbitrator to break a deadlock.). The Taft-Hartley Act expressly permits an ERISA plan with employee and employer representatives to utilize an impartial arbitrator to break a deadlock: [U]pon and in the event the employer and employee groups deadlock on the administration of such fund and there are no neutral persons empowered to break such deadlock, such agreement provides that the two groups shall agree on an impartial umpire to decide such dispute. 29 U.S.C. § 186(c)(5)(B). The Supreme Court has endorsed the use of a neutral arbitrator to break a deadlock as consistent with the purposes of the Taft-Hartley Act. See N.L.R.B. - 14 - v. Amax Coal Co., 453 U.S. 322, 337-38 (1981) ([Section] 302(c)(5) [of the Taft-Hartley Act, 29 U.S.C. § 186(c)(5)] explicitly provides for the compulsory resolution of any deadlocks among welfare fund trustees by a neutral umpire.). Here, the BGC Pension Plan, by its clear terms, designates the JPC as a fiduciary and delegates discretionary fiduciary responsibilities under ERISA to the JPC in several areas. See Rodríguez-López, 850 F.3d at 23; Terry v. Bayer Corp., 145 F.3d 28, 37-38 (1st Cir. 1998) (ERISA allows named fiduciaries to delegate responsibilities by expressly providing for procedures for named fiduciaries to designate persons other than named fiduciaries to carry out fiduciary responsibilities (other than trustee responsibilities) under the plan. (cleaned up)). The JPC shall have such powers as are necessary for the proper execution of its duties and is authorized to decide under Section 12.027 the matters on which it has power to rule. That latter power includes the authority to resolve questions relating to eligibility: the Committee appointed to resolve questions relating to eligibility as set forth in Article 12, and such Committee shall discharge its duties as a fiduciary in accordance with the standards established under ERISA with respect to any person who exercises any discretionary authority or responsibility in the administration of the Plan. - 15 - In addition to these delegations, the BGC Pension Plan delegates discretionary authority over other questions to the JPC. For example, the BGC Pension Plan delegates to the JPC the power (1) to decide whether an employee is disabled under Section 12.025 (In the event that the members of a Joint Pension Committee cannot settle any dispute, with the exception of determining whether an Employee is disabled . . . .); (2) to determine how benefits will be distributed upon termination of the pension plan under Section 13.03 (The benefits provided for in this Article 13 may be distributed . . . as determined by the Joint Pension Committee . . . .); and (3) to find a beneficiary incompetent under Section 15.03 (If the Joint Pension Committee shall find that any person to whom a benefit is payable from the Fund is unable to care for his affairs because of illness or accident . . . .). Under federal substantive law, we must consider the entire text of the relevant documents. See Pac. Gas & Elec. Co. v. United States, 536 F.3d 1282, 1288 (Fed. Cir. 2008). Considering the entire text, we note the express delegation under Section 2.13 of the BGC Pension Plan that the JPC is appointed to resolve questions relating to eligibility (emphasis added).4 The 4 Section 12.02 of the BGC Pension Plan states that the JPC shall be formed to determine questions of eligibility under the Plan. We do not read this statement of purpose to be a limit - 16 - inclusion of the words relating to explicitly indicates that this delegation is broader than the other delegations under the BGC Pension Plan. See NOAA Md., LLC v. Adm'r of Gen. Servs. Admin., 997 F.3d 1159, 1166 (Fed. Cir. 2021) (We must interpret a contract in a manner that gives meaning to all of its provisions and makes sense, and we seek to avoid conflict or surplusage of the contract's provisions. (cleaned up)). The Supreme Court and this circuit have consistently stated that the phrase relating to is a broad one. See, e.g., Morales v. Trans World Airlines, Inc., 504 U.S. 374, 383-84 (1992) (The ordinary meaning of these words is a broad one -- 'to stand in some relation; to have bearing or concern; to pertain; refer; to bring into association with or connection with.' (quoting Black's Law Dictionary 1158 (5th ed. 1979))); Moore v. Elec. Boat Corp., 25 F.4th 30, 35 n.4 (1st Cir. 2022). Further, Section 12.025 of the BGC Pension Plan provides a delegation of authority to a neutral arbitrator in the event the JPC deadlocks, which serves the purposes of the Taft-Hartley Act, on the JPC's authority, particularly where other provisions in the BGC Pension Plan expressly provide that the scope of the JPC's authority exceeds questions of eligibility. See NVT Techs., Inc. v. United States, 370 F.3d 1153, 1159 (Fed. Cir. 2004) (When interpreting the contract, the document must be considered as a whole and interpreted so as to harmonize and give reasonable meaning to all of its parts.). - 17 - as recognized by the Supreme Court. See 29 U.S.C. § 186(c)(5)(B); Amax Coal Co., 453 U.S. at 337-38. The question at the heart of this case is whether the Union's grievances fall within the JPC's purview as questions relating to eligibility, and thus are subject to arbitration in the event of a deadlock. However, there is an initial threshold question as to whether the JPC, under the documents, has the authority to decide whether it has power to rule. In answering that question, we review the language of the Plan de novo, just as we would review the language of any contract. Stephanie C., 813 F.3d at 428 (quoting Ramsey v. Hercules Inc., 77 F.3d 199, 205 (7th Cir. 1996)). When reviewing the language of an ERISA benefit plan, we look to federal substantive law and common-sense canons of contract interpretation. Bellino v. Schlumberger Techs., Inc., 944 F.2d 26, 29 (1st Cir. 1991) (quoting Burnham v. Guardian Life Ins. Co. of Am., 873 F.2d 486, 489 (1st Cir. 1989)). The Company argues that as a matter of law, the authority to decide whether the JPC had the power to rule on the grievances was retained by the Plan Administrator in the Master Plan. We disagree. Nowhere in either the Master Plan or the BGC Pension Plan does the plain text unambiguously indicate that the Plan Administrator retained the authority to determine whether a dispute is within the JPC's power to rule. Stephanie C., 813 - 18 - F.3d at 428 (The phraseology that [defendant] chose to use in the Certificate to describe its decisionmaking authority is capable of supporting reasonable differences of opinion as to the nature and extent of the authority reserved to [defendant].); see Gross, 734 F.3d at 16. To the contrary, Section 12.027 of the BGC Pension Plan states that the authority to determine whether a matter falls within or outside the JPC's power to rule has been delegated to the JPC: Any case referred to a Joint Pension Committee on which it has no power to rule shall be referred back to the parties without ruling. Under Article 12, the JPC necessarily must have the power to make that determination. In addition, under Section 12.029, the JPC's decisions within its authority are binding on . . . the Plan Administrator. The first issue for the arbitrator is to determine whether the JPC has the power to rule on the grievances. If so, the resolution of the ambiguity in the record as to the basis of the JPC's deadlock and whether to then proceed to resolve the merits of the Union's grievances are matters for the arbitrator to decide. We note, again, that the jurisdiction of the JPC is not limited to questions of eligibility under the plain terms of the BGC Pension Plan. The relating to language under the BGC Pension - 19 - Plan indicates that the JPC's delegated authority is broader than just questions of eligibility.5 Finally, the Company protests that a reading of the JPC's authority which would result in sending these matters to arbitration would necessarily mean that the JPC has the authority to resolve virtually any dispute over vesting, amount or form of pension benefits. The Company is free to argue that to the arbitrator. We do point out that the delegation of authority described above does not render the Master Plan's claims procedure superfluous, as the Master Plan's claims procedure would still apply to other Company employees covered by the Master Plan but not subject to the BGC Pension Plan. It is up to an arbitrator, not a court, to determine the matters described above. The arbitrator will determine whether the JPC has the power to resolve the disputes, and, if so, whether the arbitrator should proceed to address the merits in the wake of the JPC's deadlock. 5 Further, the BGC Pension Plan indeed grants the JPC authority to decide issues that do not fall under the Plan Administrator's limited definition of eligibility, including the power to decide whether an employee is disabled, the power to determine how benefits will be distributed upon termination of the pension plan, and the power to find a beneficiary incompetent and designate who may receive their pension payment. - 20 -