Opinion ID: 724948
Heading Depth: 2
Heading Rank: 1

Heading: Interpretive principles in the federal common law of ERISA

Text: 35 A key principle guiding our resolution of the Retirees' claim is that we must look to the plain language of the CLPT plan to determine whether the Trustees' interpretation of that plan is arbitrary and capricious. We have consistently explained that trustees abuse their discretion if they ... construe provisions of [a] plan in a way that clearly conflicts with the plain language of the plan. Johnson v. Trustees of the Western Conf. of Teamsters Pension Trust Fund, 879 F.2d 651, 654 (9th Cir.1989) (citation omitted); accord Saffle v. Sierra Pacific Power Co., 85 F.3d 455 (9th Cir.1996); Eley, 945 F.2d at 279 (citing Johnson, 879 F.2d at 654); see also Menhorn, 738 F.2d at 1500, n. 2 ([a]ctions to recover benefits or enforce rights under the terms of a plan will typically involve the application of [ ] general principles of contract law[.]). The question we must ask in resolving this dispute is not whose interpretation of the plan documents is most persuasive, but whether the [Trustees'] interpretation is unreasonable. Winters, 49 F.3d at 553 (citation omitted). 36 To determine whether the Retirees are entitled to retroactive retirement benefits despite their failure to apply for benefits, we look to the CLPT plan provisions governing benefit eligibility and benefit payments. We start with Article II, which governs Eligibility for Retirement Benefits. Section 2.02 of Article 2 provides that an employee shall be entitled to retire on a Regular Pension under this Plan if he satisfies all of the requirements of one of the following plans [.] Section 2.02 (emphasis added). It then enumerates three requirements for eligibility under Plan Two: (1) 15 years of service, (2) attainment of age 62, and (3) 700 covered hours of employment. By its mandatory language (shall be entitled), Section 2.02 provides that these three criteria--years of service, age, and covered hours--are the sole and exclusive requirements for eligibility under the CLPT plan. Section 2.02 thus does not require an application for benefits as a condition of eligibility. Instead, Section 2.02 confers eligibility on an employee once he has satisfied the three conditions listed in Plan Two. In plain and absolute terms, Section 2.02 provides that an employee who satisfies all three requirements shall be entitled to retire on a Regular Pension. (emphasis added). Section 2.02 thus guarantees normal retirement benefits to eligible employees. 37 Sections 5.01 and 5.03 reinforce our conclusion that an application is not a condition of eligibility under the CLPT plan. First, although Section 5.01 requires an eligible employee to submit an application to begin receiving benefit payments, it does not require an application as a condition of eligibility. On the contrary, Section 5.01 refers to employees who already meet[ ] the conditions of eligibility[,] and provides that such employees shall, upon approval of an application ... become entitled to [p]ension [b]enefits[.] By referring to eligible employees, Section 5.01 clearly contemplates that an employee will already have satisfied the conditions of eligibility before applying for payments to begin. Section 5.01 thus suggests that eligibility is defined elsewhere in the CLPT plan, and does not depend on the submission of an application. 38 Second, Section 5.03 describes the earliest date payments may commence for an eligible [e]mployee[:] generally the first day of the month after the employee fills out and signs an application, but [i]n any event, no earlier than the date of the Employee's eligibility for Pension Benefits. Section 5.03. Section 5.03's reference to the date of [an] [e]mployee's eligibility suggests that the date of eligibility is wholly independent from the date of application. Indeed, as noted above, Section 2.02 establishes that the date of eligibility is the first date all of the following are true: (1) the employee has completed 15 years of service, (2) the employee has reached age 62, and (3) the employee has worked 700 covered hours. The date an employee applies for benefits thus has no bearing on the date that employee becomes eligible for retirement benefits. 39 Finally, the structure of the CLPT plan reinforces our conclusion that the plan does not require an application as a condition of eligibility. Article 2 and Article 5 cover separate provisions of the plan: Article 2 governs Eligibility for Retirement Benefits, while Article 5 governs Payment of Benefits. The separation of these provisions into different articles of the CLPT plan indicates that eligibility for retirement benefits is wholly independent from the payment of those benefits. 40 We are not persuaded by the Trustees' assertion that the CLPT plan bars the retroactive payment of retirement benefits to an employee who is eligible for those benefits. Nowhere does the CLPT plan provide that an employee's failure to submit an application for benefits will result in the retroactive loss of benefits for which that employee is eligible. Although an application is required to initiate payment of benefits, it does not follow from this procedural requirement that the failure to apply for payment of benefits entails the complete loss of those benefits retroactively. On the contrary, the plain terms of Section 2.02 mandate that an eligible employee shall be entitled to retire on a Regular Pension under this Plan if he satisfies all of the requirements of one of the following plans[.] Section 2.02 (emphasis added). This mandatory language guarantees retirement benefits to employees who have met the three requirements of eligibility: service, age, and covered hours. An employee's failure to apply for retirement benefits cannot destroy that employee's eligibility. 41 The Trustees construe Sections 5.01 and 5.04 to prohibit the payment of retroactive benefits. The Trustees' interpretation of these sections is not reasonable, however, since it places Sections 5.01 and 5.04 in conflict with the mandatory language of Section 2.02. Section 5.01 simply requires an employee to comply with an administrative formality--the submission of an application--in order to begin receiving payments. This procedural requirement does not prohibit the retroactive payment of benefits, however. Section 5.04 provides that the payment of benefits shall commence not later than March 1 of the year following the employee's 65th birthday. This section simply identifies the latest date the CLPT plan must begin disbursing benefits to an eligible employee, but it does not prevent the pension plan from disbursing retroactive benefits. As we explained above, Section 2.02, by its mandatory language, guarantees normal retirement benefits to eligible employees. The payment of benefits retroactive to the date of eligibility is necessary to preserve Section 2.02's guarantee. By construing the CLPT plan to preclude the retroactive payment of benefits to eligible employees, the Trustees strip Section 2.02 of its meaning. Such an interpretation is arbitrary and capricious. 42 Confronted with a similar interpretive issue, the Fourth Circuit held that a pension plan administrator could not deny an eligible plan participant retroactive benefits on the basis of that participant's failure to timely apply for those benefits. Cotter v. Eastern Conf. of Teamsters Retirement Plan, 898 F.2d 424 (4th Cir.1990). The facts of Cotter are strikingly similar to the facts of this case. The plaintiff in Cotter, like the Retirees in this case, failed to claim retirement benefits at the time he became eligible for them because he believed, erroneously, that he was ineligible for benefits. Cotter was employed for 20 years by the Eastern Conference of Teamsters, then retired from the Eastern Conference to work for the International Brotherhood of Teamsters. At the time he retired from the Eastern Conference and began working for the International, Cotter was in fact eligible for retirement benefits under the Eastern Conference's pension plan. However, he did not file a claim for benefits until eight years after attaining eligibility because he believed he would not be eligible for benefits until he also retired from the International. When Cotter subsequently learned that under the pension plan, he could have received retirement benefits from the Eastern Conference during his tenure at the International, he applied for benefits retroactive to the date he attained eligibility. Because Cotter had failed to file a claim for benefits at the time he became eligible for them, however, the plan administrator refused to pay him retroactive benefits, insisting that the plan's terms required an application as a prerequisite to the receipt of benefits. Like the Retirees in this case, Cotter sued his pension plan under 29 U.S.C. § 1132(a)(1)(B), claiming that the terms of the plan entitled him to retroactive benefits and that the plan administrator had violated his fiduciary duty by denying the claim. 43 The Fourth Circuit in Cotter concluded that the plan administrator abused his discretion in denying Cotter retirement benefits retroactive to the time he became eligible for them. A key part of the court's reasoning was that the plan administrator's interpretation of the plan was unreasonable because it contravened the terms of the plan. It concluded that the plan's requirement that a participant file a claim to receive benefits was merely administrative and did not prevent the award of retroactive benefits for which the participant had attained eligibility. Cotter, 898 F.2d at 428. 44 The Trustees insist Cotter is distinguishable because it involved different plan language. We disagree. Although the wording of the two plans is different, the Cotter court relied chiefly on the structure of the plan, which resembles the structure of the CLPT plan. Like the application requirement in Cotter, the application requirement in the CLPT plan is contained in a portion of the plan governing the mere administration of benefits, rather than the requirements of eligibility. Id. To the extent that the structure of the two plans is similar, Cotter is instructive and reinforces our conclusion that the application requirement is merely administrative. 45
46 A second interpretive principle guiding our analysis is that pension plan trustees or administrators may not construe a plan so as to impose an additional requirement for eligibility that clashes with the terms of the plan. Lower federal courts have held that where plan trustees impose a standard [of eligibility for pension plan benefits] not required by the pension plan itself, that action  'result[s] in an unwarranted and arbitrary construction of the [p]lan.'  Morgan v. Mullins, 643 F.2d 1320, 1321 (8th Cir.1981) (quoting Maness v. Williams, 513 F.2d 1264, 1267 (8th Cir.1975)). 47 We have applied this principle in the context of severance benefits and disability benefits. In Blau v. Del Monte Corp., 748 F.2d 1348 (9th Cir.), cert. denied, 474 U.S. 865, 106 S.Ct. 183, 88 L.Ed.2d 152 (1985), an employer denied severance benefits to several employees. The terms of the severance plan provided for severance pay when jobs [were] 'eliminated' and 'alternative employment opportunities [were] unavailable within the [employer corporation].'  Blau, 748 F.2d at 1354. The employer denied severance benefits, however, because it insisted that the employees additionally needed to show that several other conditions were met, including that there were no positions available outside the corporation, Id. at 1354-55, and that the employees subsequently remained unemployed. Id. at 1355. We concluded that the employer in Blau was attempting to impose additional conditions of eligibility above and beyond those required by the terms of the plan, and we refused to imply other conditions into the plan[.] As we explained in Blau: Imposition of conditions outside the plan amounts to arbitrary and capricious conduct[.] Id. at 1356. 48 Recently, in Saffle, we extended this principle to disability benefits. In Saffle, a plan administrator denied an employee long-term benefits for total disability. The administrator concluded that the employee did not satisfy the definition of total disability because medical reports concluded the employee could return to work if her job was modified to allow her to perform exclusively sedentary work. On appeal, we rejected the administrator's interpretation of the disability plan in part because the administrator construed the plan to prohibit benefits if the employee was able to continue working with accommodations. Such an interpretation, we concluded, would operate to impose[ ] a new requirement for coverage: it would require the claimant to show that accommodations were futile. We rejected this implied additional term, explaining that a [plan] administrator lacks discretion to rewrite the [p]lan. Saffle, 85 F.3d at 459-60 (citations omitted). 49 Applying this principle here, we conclude that the Trustees worked a similar abuse of discretion in interpreting the CLPT plan's application requirement as a prohibition on the payment of retroactive retirement benefits. By retroactively denying benefits to a class of workers who have indisputably earned them, the Trustees have, in effect, imposed on those workers an additional requirement of eligibility: the submission of an application for benefits. We reject such an additional requirement as inconsistent with the terms of the CLPT plan, since nothing in the CLPT plan makes an application a prerequisite for eligibility. 50 Based on the plain language of the CLPT plan, we conclude that the submission of an application is not a condition of eligibility but is merely an administrative procedure that triggers the commencement of benefit payments. As such, the application requirement cannot override the CLPT plan's mandate that an employee who satisfies all of the requirements of eligibility shall be entitled to retire on a Regular Pension under this Plan[.] Section 2.02. Although an application is required for payments to begin, this administrative requirement does not operate to strip eligible retirees of the benefits they earned upon satisfying the three requirements of Plan Two. In construing the CLPT plan to prohibit the retroactive payment of benefits for which the Retirees are indisputably eligible, the Trustees offered an interpretation of the CLPT plan that clearly conflicted with its plain language. 51 Remand to the plan administrator is appropriate where that administrator has construe[d] a plan provision erroneously and therefore has not yet had the opportunity of applying the [p]lan, properly construed, to [a claimant's] application for benefits. Id. at 461. On the facts of this case, however, we conclude that remand is inappropriate. Although the Trustees misconstrued the terms of the CLPT plan, remand is not necessary because reevaluation of the merits of [the Retirees'] claim is not required here. Cf. Id. Unlike cases wherein we have remanded to the plan administrator, no factual determinations remain to be made in this case. Cf. Id. (remanding to the plan administrator for application of correct standard for determining whether claimant had total disability for purposes of disability benefits); Patterson v. Hughes Aircraft Co., 11 F.3d 948, 951 (9th Cir.1993) (remanding to plan administrator for factual determination as to cause of claimant's disability); and Mongeluzo v. Baxter Travenol Long Term Disability Benefit Plan, 46 F.3d 938, 944 (9th Cir.1995) (remanding for reevaluation of evidence in light of new medical standard).