Court Opinion

ID: 9410782
Source: CourtListenerOpinion
Date Created: 2023-07-24 16:00:43.091088+00
Date Added: 2024-06-11T17:21:00.319448
License: Public Domain

22-2544-cv
Aracich v. Bd. of Trustees et al.

                           UNITED STATES COURT OF APPEALS
                               FOR THE SECOND CIRCUIT

                                          SUMMARY ORDER

Rulings by summary order do not have precedential effect. Citation to a summary order
filed on or after January 1, 2007, is permitted and is governed by Federal Rule of Appellate
Procedure 32.1 and this court’s Local Rule 32.1.1. When citing a summary order in a
document filed with this court, a party must cite either the Federal Appendix or an
electronic database (with the notation “summary order”). A party citing a summary order
must serve a copy of it on any party not represented by counsel.

        At a stated term of the United States Court of Appeals for the Second Circuit,
held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the
City of New York, on the 24th day of July, two thousand twenty-three.

        PRESENT:            Amalya L. Kearse,
                            Dennis Jacobs,
                            Steven J. Menashi,
                                     Circuit Judges.
____________________________________________
MATTHEW ARACICH,

                   Plaintiff-Appellant,

            v.                                                 No. 22-2544-cv

THE BOARD OF TRUSTEES OF THE EMPLOYEE
BENEFIT          FUNDS         OF    HEAT        AND   FROST
INSULATORS             LOCAL        12,    THE    EMPLOYEE
BENEFIT          FUNDS         OF    HEAT        AND   FROST
INSULATORS             LOCAL        12,    THE   BOARD   OF
TRUSTEES OF THE PENSION FUND OF HEAT
AND FROST INSULATORS LOCAL 12 PLAN, THE
PENSION             FUND        OF      HEAT         AND        FROST
INSULATORS LOCAL 12 PLAN, THE BOARD OF
TRUSTEES             OF      THE        HEAT        AND         FROST
INSULATORS LOCAL 12 WELFARE FUND, THE
HEAT AND FROST INSULATORS LOCAL 12
WELFARE              FUND,        AL      WASSELL,           IN     HIS
CAPACITY             AS     FUND        MANAGER             OF     THE
EMPLOYEE BENEFIT FUNDS OF HEAT & FROST
INSULATORS LOCAL 12, JOHN DOES 1-10,
WHOSE               IDENTITIES            ARE         CURRENTLY
UNKNOWN, CONSTITUTING THE TRUSTEES,
PLAN ADMINISTRATORS OR FIDUCIARIES OF
THE EMPLOYEE BENEFIT FUNDS OF HEAT &
FROST INSULATORS LOCAL 12 AND THE
PENSION             FUND        OF      HEAT         AND        FROST
INSULATORS LOCAL 12 AND THE HEAT AND
FROST INSULATORS LOCAL 12 WELFARE FUND,

                     Defendants-Appellees. *
____________________________________________________

For Plaintiff-Appellant:                             CHRISTOPHER SMITH, Trivella & Forte, LLP,
                                                     White Plains, NY.

For Defendants-Appellees:                            JOSEPH E. CLARK (Myron D. Rumeld &
                                                     Sydney L. Juliano, on the brief), Proskauer
                                                     Rose LLP, New York, NY.

           Appeal from a judgment of the United States District Court for the Southern
District of New York (Briccetti, J.).

*   The Clerk of Court is respectfully directed to amend the official caption as set forth above.
                                                        2
      UPON       DUE     CONSIDERATION,            IT   IS   HEREBY       ORDERED,
ADJUDGED, AND DECREED that the judgment of the district court is
AFFIRMED.

      Plaintiff-Appellant Matthew Aracich appeals from a judgment of the district
court granting the defendants-appellees’ motion to dismiss the complaint
pursuant to Federal Rule of Civil Procedure 12(b)(6). Aracich, the former business
manager of the International Association of Heat and Frost Insulators Local No. 12
(“Union”), brought this action against the Welfare Fund of the Union (“Welfare
Plan”); the Pension Fund of the Union (“Pension Plan” and, together with the
Welfare Plan, “Plans”); the Board of Trustees of each of the Plans; Al Wassell, in
his capacity as manager of the Plans; and ten unidentified defendants constituting
the trustees, plan administrators or fiduciaries of the Plans. Aracich claimed that
the defendants had improperly deemed Aracich not to be “retired” for the
purposes of the Plans’ governing documents. Based on that determination, the
defendants denied his request for pension and retiree health benefits, a decision
he alleges violated the Employee Retirement Income Security Act of 1974
(“ERISA”) and state law.

      Aracich filed his complaint in this action on November 19, 2021. The
Trustees moved to dismiss the complaint under Rule 12(b)(6) on the ground that
it failed to state a claim for relief. In a decision dated September 20, 2022, the
district court dismissed the complaint in its entirety for failure to state a claim. See
Aracich v. Bd. of Trustees of Emp. Benefit Funds of Heat & Frost Insulators Loc. 12, 629
F. Supp. 3d 103 (S.D.N.Y. 2022). Aracich now appeals. We assume the parties’
familiarity with the underlying facts and procedural history.

                                           I

      The Pension Plan and the Welfare Plan are multiemployer pension and
welfare plans, respectively, that provide benefits to eligible participants. ERISA
governs both. The Plans were instituted by collective bargaining agreements
between the Union and employers who contribute to the Plans on behalf of their

                                           3
employees. The Trustees, comprised of Union and employer representatives,
oversee the Plans.

      A plan document governs each of the Plans. Each plan document grants the
Trustees the discretion to interpret the terms of the plan and to make the necessary
benefit determinations. Section 6.3 of the Pension Plan Document (“PPD”), which
governs the Pension Plan, provides that the Trustees are “the sole judges of the
standard of proof required in any case and the application and interpretation of
the Plan,” App’x 232, while Section 6.4(a) provides that “[a]ny dispute as to
eligibility, type, amount or duration of benefits or any right or claim to payments
from the Plan shall be resolved by the Board of Trustees … and its decision … shall
be final and binding on all parties,” id. The Pension Fund Summary Plan
Description explains that the Board of Trustees “reserves the right, in its sole and
absolute discretion, to … interpret and decide all matters under the Plan, or any
benefits provided under the Plan.” Id. at 198.

      The Welfare Fund Summary Plan Description similarly states that the
Trustees and the claims administrator have “discretionary authority to interpret
the terms of the Plan and to determine eligibility and entitlement to Plan Benefits
in accordance with the terms of the Plan” and that “[a]ny interpretation or
determination will be given full force and effect, unless it can be shown that the
interpretation or determination was arbitrary and capricious.” Id. at 118.

      The Pension Plan provides a participant with benefits if that participant has
retired and qualifies for either a “[r]egular [p]ension” or an “[e]arly [r]etirement
pension.” Id. at 211-12 (§§ 3.2, 3.4). Qualification for either pension depends on
“[p]ension [c]redits,” id. at 208 (§ 1.20), which reflect the participant’s earnings and
time of service in “[c]overed [e]mployment,” id. at 216 (§ 4.1). The PPD defines
“[c]overed [e]mployment” as employment with an employer that is required

                                           4
under a CBA or other agreement to contribute to the Pension Plan. Id. at 204-05
(§§ 1.8, 1.10). †

       The PPD states that “[t]o be considered retired, a Participant must have
separated from Covered Employment.” App’x 239 (§ 6.8(a)). The Pension Fund
Summary Plan Description explains that, in order to receive pension benefits, a
participant “must stop working.” Id. at 185. The Welfare Fund Summary Plan
Description explains that retirees will be eligible to receive health benefits if they
“work until age 60 and then [r]etire (as that term is defined in the [PPD]) while
eligible for benefits.” Id. at 132.

       Aracich worked in covered employment at the Union where he served as
business manager. In 2018, he left his position at the Union to become president of
the Building and Construction Trades Council of Nassau & Suffolk Counties, AFL-
CIO (“the Council”), where he is currently employed. After Aracich started work
at the Council, the Council executed a participation agreement with the Plans
pursuant to which the Council would contribute to the Plans on behalf of Aracich.
The arrangement allowed Aracich to continue to accrue pension credits despite
having left the Union.

       On January 27, 2021, Aracich informed the Plans that, effective January 1,
2021, the Council intended to terminate the participation agreement and engage
another benefits provider for Aracich. On February 11, 2021, Al Wassell, the
manager of the Plans, responded to Aracich that the Plans accepted the Council’s
termination of the participation agreement. Then, on February 26, 2021, Aracich
sent a letter to Wassell announcing that he would “be retiring from Local Union
No. 12” that day, effective at 4:00 pm. Id. at 280.

† To obtain a “[r]egular pension,” the participant must have reached the “normal retirement age”
of 65 years, App’x 208 (§ 1.17), and have earned at least five years of pension credit, id. at 211
(§ 3.2). To obtain an “[e]arly [r]etirement [p]ension,” a participant must be at least 55 years of age
and have earned at least ten years of pension credit. Id. at 212 (§ 3.4). The amount of pension
credits earned in a calendar year is a function of the hours worked in covered employment. See
id. at 216. A participant may earn no more than one pension credit per year. See id.
                                                  5
       At the time he sent the February 26 letter, Aracich was 60 years old—old
enough to meet the age requirement for both an early retirement pension and
retiree welfare benefits. He also had earned over thirty years of pension credits.
However, he remained employed at the Council. His purported retirement was
occasioned only by the Council ceasing to make contributions to the Plans and
thereby no longer qualifying as a covered employer.

      The Trustees understood Aracich’s February 26 letter to be a claim for an
early retirement pension and denied the claim by letter dated March 12, 2021. The
denial letter informed Aracich that he could not begin receiving his pension
benefits because he “never ceased working for the [Council]” and was therefore
“not eligible under the terms of the Plan to commence receiving a pension benefit
at this time.” Id. at 281. The letter noted that the Pension Fund Summary Plan
Description explains that a participant “must stop working” in order to begin
receiving benefits. Id.

      On May 3, 2021, Aracich appealed the claim, arguing that he had “retired”
for the purposes of the Pension Plan because his post-retirement work was with
the Council, which was no longer covered by a collective bargaining agreement
with the Union. He also argued that the PPD and Pension Fund Summary Plan
Description violated ERISA’s “anti-cutback” rule, 29 U.S.C. § 1054(g), to the extent
that those documents “expand which types of post-retirement employment
triggered suspension of plan benefits,” App’x 284.

      The Trustees denied Aracich’s appeal by letter dated May 21, 2021,
repeating that Aracich was not retired for the purposes of the Pension Plan. The
Trustees also argued that allowing Aracich to begin receiving benefits despite his
current employment with the Council could compromise the Pension Plan’s tax-
qualified status. Id. at 281.

      Following the denial, Aracich filed his complaint in this action, alleging five
causes of action. Count One asserted a claim for pension and welfare benefits
under ERISA § 502(a)(1)(B), contending that the Trustees arbitrarily and
capriciously denied Aracich his pension and welfare benefits as promised by the
terms of the Plans. Count Two alleged that the Trustees had violated ERISA § 510
                                         6
by “engag[ing] in a scheme to intentionally interfere with [Aracich’s] contractual
and vesting rights and benefit entitlements.” App’x 4.15 (¶ 48). The scheme
consisted of (1) denying him benefits to which he was entitled and inducing other
fund representatives to interfere with his rights under the Plans; (2) failing to
notify him of a Pension Plan amendment that was applied after his alleged
retirement; and (3) treating him differently from similarly situated Plan
participants. Id. at 4.15-4.17 (¶¶ 47-53). Count Three sought a declaratory
judgment that Aracich was entitled to benefits he had been denied. Count Four
alleged that the Trustees’ denial of Aracich’s benefit claims constituted a common
law breach of contract. Count Five contended that the Trustees breached their
fiduciary duties (1) by denying Aracich benefits in contravention of the Plans’
governing documents, (2) by misrepresenting the terms of these documents, and
(3) by failing to adhere to the disclosure and reporting requirements set forth in 29
C.F.R. § 2520.104-23(b), 29 U.S.C. § 1030, and/or 29 U.S.C. § 1024(b).

                                          II

      We review de novo a district court’s dismissal of a complaint for failure to
state a claim pursuant to Rule 12(b)(6). Fink v. Time Warner Cable, 714 F.3d 739, 740-
41 (2d Cir. 2013).

                                          A

      First, Aracich contends that the Trustees violated ERISA by interpreting the
term “Contributing Employer” in an arbitrary and capricious fashion. According
to Aracich, the Trustees wrongfully understood the term “as [referring to] any
employer, not solely employers with a present obligation to contribute to the
Pension Fund of Heat and Frost Insulators Local 12 Plan.” Appellant’s Br. 13.
Aracich also claims that the district court erred in applying the arbitrary and
capricious standard of review to his claim. Instead, he argues, de novo was the
proper standard of review. We disagree.

      “Section 502 of ERISA authorizes participants in an employee benefit plan
to bring a civil action (i) to recover benefits due to them under the terms of their
plan, and (ii) to obtain other appropriate equitable relief to redress violations or

                                          7
enforce any provisions of ERISA or the terms of the plan.” Soto v. Disney Severance
Pay Plan, 26 F.4th 114, 117 (2d Cir. 2022) (internal quotation marks, alterations, and
citations omitted). When “the relevant plan vests its administrator with
discretionary authority over benefits decisions,” its decisions “may be overturned
only if they are arbitrary and capricious.” Roganti v. Metro. Life Ins. Co., 786 F.3d
201, 210 (2d Cir. 2015). Such discretion includes “interpret[ing] ambiguous plan
terms.” Soto, 26 F.4th at 121.

      Under the “highly deferential” arbitrary and capricious standard, a district
court will uphold a plan administrator’s decision unless it was “without reason,
unsupported by substantial evidence or erroneous as a matter of law.” Id. at 123
(quoting Roganti, 786 F.3d at 211). If a plan administrator and claimant “offer
rational, though conflicting, interpretations of plan provisions, the administrator’s
interpretation must be allowed to control.” McCauley v. First Unum Life Ins. Co.,
551 F.3d 126, 132 (2d Cir. 2008) (quoting Pulvers v. First UNUM Life Ins. Co., 210
F.3d 89, 92-93 (2d Cir. 2000)).

      According to the PPD, “[t]o be considered retired, a Participant must have
separated from Covered Employment.” App’x 239 (§ 6.8(a)). The PPD does not
further define “separated.” However, the Pension Fund Summary Plan
Description explains that “[y]ou must stop working” in order to receive benefits.
Id. at 185. To the extent that it is ambiguous whether “separated” refers to the
participant actually separating from the employer—or whether separation could
be accomplished by the employer ceasing to be a covered employer while the
participant continues working—Sections 6.3 and 6.4 of the PPD grant discretion to
the Trustees to determine whether an individual has “separated” and is therefore
retired for the purposes of the plan.

      We agree with the district court that the Trustees properly exercised such
discretion here. In concluding that the interpretation of the Trustees was
reasonable, the district court relied on the definition of “retire” found in the PPD,
App’x 239 (§ 6.8); on the explanation in the Pension Fund Summary Plan
Description that one “must stop working” in order to begin receiving benefits,
App’x 185; and on the Trustees’ concern that allowing Aracich to receive benefits
                                          8
would jeopardize the Plan’s tax-qualified status. These are proper considerations
that, especially taken together, demonstrate that the Trustees’ interpretation of the
PPD was neither “without reason” nor “erroneous as a matter of law.”

      We disagree with Aracich’s contention that we must review the Trustees’
determination de novo. De novo review is appropriate when the administrator is
interpreting unambiguous terms because “unambiguous language leaves no room
for the exercise of discretion.” Soto, 26 F.4th at 121 (quoting O’Neil v. Ret. Plan for
Salaried Emps. of RKO Gen., Inc., 37 F.3d 55, 59 (2d Cir. 1994)). The definition of
“retire,” including the requirement that a participant have “separated” from
covered employment, does not unambiguously provide that a participant such as
Aracich who continues working at the same employer must be considered retired
for the purposes of the Plans.

                                          B

      Second, Aracich challenges the district court’s dismissal of his claim under
ERISA § 510, 29 U.S.C. § 1140. According to the district court, Aracich failed to
state a claim under § 510 because he failed to plead the requisite intent or plausibly
to allege an adverse employment action that was taken against him. He contends
that he satisfied the pleading requirements of Federal Rule of Civil Procedure 8
and cites language from his original complaint. We agree with the district court
that Aracich failed adequately to allege that he suffered an adverse employment
action; we likewise agree that his allegations of a scheme by the Trustees and of
disparate treatment compared to other similarly situated employees are
conclusory. Those allegations accordingly do not move his claim “across the line
from conceivable to plausible.” Ashcroft v. Iqbal, 556 U.S. 662, 680 (2009) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). We affirm the district court’s
dismissal of Count Two.

                                          C

      Third, Aracich contends that the Trustees’ interpretation of the term “retire”
to require cessation of all employment—when the plan definition of “retire”

                                          9
specifies “separate[] from Covered Employment”—is a de facto amendment to the
pension plan that violates ERISA § 204(g), 29 U.S.C. § 1054(g). We disagree.

      An interpretation, or even a re-interpretation, does not constitute a plan
amendment for the purposes of ERISA’s anti-cutback rule. See Kirkendall v.
Halliburton, Inc., 707 F.3d 173, 184 (2d Cir. 2013) (“Even broadly interpreted, the
word ‘amendment’ contemplates that the actual terms of the plan changed in some
way or that the plan improperly reserved discretion to deny benefits.”) (citation
omitted). Aracich does not identify a change in the actual terms of the plan. He
remains entitled to his pension, which he can collect when he retires. We affirm
the district court’s dismissal of Count Three.

                                         D

      Fourth, Aracich claims that the district court incorrectly treated his breach-
of-contract claim as based on state law rather than a claim against the plan and
pursuant to ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B). We are not persuaded.

      The district court explained that Aracich’s breach-of-contract claim “is
duplicative of, and therefore preempted by, ERISA.” Aracich, 629 F. Supp. 3d at
116. Aracich “claims defendants breached the Plans’ governing documents by not
paying his benefits.” Id. That claim duplicates Aracich’s other claims under ERISA,
and indeed the district court considered Aracich’s claims “to recover benefits due
to him under the terms of his plan” and “to enforce his rights under the terms of
the plan.” 29 U.S.C. § 1132(a)(1)(B). We affirm the district court’s dismissal of
Count Four.

                                         E

      Fifth, Aracich argues that the Trustees breached “their duty to him to
exercise prudent man diligence and care and skill under the circumstances in their
fiduciary capacity as Trustees of the Pension Fund,” Aracich Br. 23, when they
(1) improperly denied his claim for benefits; (2) failed to adhere to the Plans’
governing documents; (3) misrepresented to him the terms of the documents;
and/or (4) failed to satisfy ERISA’s disclosure and reporting requirements. We
again disagree.
                                         10
      The first two contentions reiterate the basis of Aracich’s claim for benefits
and do not state an independent claim for breach of fiduciary duty. With respect
to the third and fourth contentions—misrepresentation and non-compliance—
Aracich fails to identify documents that were not provided to him or reporting
standards the Trustees failed to satisfy. We again affirm the district court.

                                   *      *     *
      We have considered Aracich’s remaining arguments, which we conclude
are without merit. We affirm the judgment of the district court.

                                        FOR THE COURT:
                                        Catherine O’Hagan Wolfe, Clerk of Court

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