Opinion ID: 724948
Heading Depth: 3
Heading Rank: 1

Heading: The plain language of the plan

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