Court Opinion

ID: 4460766
Source: CourtListenerOpinion
Date Created: 2019-12-03 18:00:29.77114+00
Date Added: 2024-06-11T14:53:37.564169
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

RICHARD LEHMAN, on behalf of          No. 18-35321
himself and others similarly
situated; MICHAEL                         D.C. No.
PUTERBAUGH,                         2:13-cv-01835-RSM
            Plaintiffs-Appellees,

               v.                     ORDER AND
                                       OPINION
WARNER NELSON; WILLIAM
BECK, JR.; BRIAN BISH; KLAAS
A. DEBOER; MICHAEL G.
MARSH; ROCKY SHARP;
RICHARD BAMBERGER; DENNIS
CALLIES; CLIF DAVIS; TIM
DONOVAN; HARRY THOMPSON;
CLINT BRYSON; MICHAEL
CHURCH; MICHAEL DOYLE;
GREG ELDER; GLEN FRANZ;
GARY GONZALES; CARL D.
HANSON; PATRICK POWELL;
GARY PRICE; SCOTT STEPHENS;
ROGER TOBIN; GRANT ZADOW,
in their capacity as Trustees of
the IBEW Pacific Coast Pension
Plan; GARY YOUNGHANS,
          Defendants-Appellants.
2                      LEHMAN V. NELSON

        Appeal from the United States District Court
           for the Western District of Washington
     Ricardo S. Martinez, Chief District Judge, Presiding

             Argued and Submitted May 13, 2019
                    Seattle, Washington

                     Filed December 3, 2019

    Before: Andrew J. Kleinfeld and Michelle T. Friedland,
      Circuit Judges, and David A. Ezra, * District Judge.

                     Opinion by Judge Ezra

                          SUMMARY **

                      Labor Law / ERISA

    The panel filed (1) an order granting a request for
publication, withdrawing the panel’s prior memorandum
disposition, and directing the filing of an opinion; and (2) an
opinion affirming the district court’s grant of summary
judgment in favor of plaintiffs in an ERISA class action
concerning pension contributions.

   After the Trustees of the IBEW Pacific Coast Pension
Fund learned that the Fund would soon enter “critical status”

     *
      The Honorable David Alan Ezra, United States District Judge for
the District of Hawaii, sitting by designation.
    **
       This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
                     LEHMAN V. NELSON                        3

under the Pension Protection Act of 2006, they twice
amended the Plan. Amendments 14 and 24 had the effect of
withholding at least $1.00 per hour from all employer
contributions.

    Plaintiff Richard Lehman, an electrician, filed a class
action against the Trustees under ERISA. Plaintiff was a
member of a different local union pension fund. When he
was temporarily employed outside his home fund, his
employer contributed to the local fund in the place where the
work was performed. Plaintiff’s home fund and the Pacific
Cost Fund were signatories to the Electrical Industry Pension
Reciprocal Agreement, under which “travelers” like plaintiff
could elect to have employer contributions from other
jurisdictions electronically transferred to their designated
home pension fund.

    In a prior appeal, Lehman I, the court held that the
Trustees could not keep the $1.00 hourly withholdings they
had made pursuant to Amendment 14, rather than including
these withholdings in the transfer payments made to
travelers’ home funds, on the Trustees’ theory that the
withholdings were not “contributions” within the meaning
of the Reciprocal Agreement. The court affirmed the district
court’s grant of summary judgment in favor of plaintiff and
award of damages to the class for all contributions withheld
under Amendment 14. The court remanded for the district
court to address whether the class could recover
contributions withheld under Amendment 24.

   On remand, the district court again granted summary
judgment in favor of the class, determining that Amendment
24 violated the plain language of Article 5 of the Pacific
Coast Pension Plan, which mandated that the Plan collect
and transfer all contributions received on behalf of travelers.
4                   LEHMAN V. NELSON

Affirming, the panel held that the Trustee’s interpretation of
Amendment 24 with regard to travelers’ contributions was
unavailing.

                        COUNSEL

Nathan R. Ring (argued) and Michael A. Urban, The Urban
Law Firm, Las Vegas, Nevada, for Defendants-Appellants.

Richard J. Birmingham (argued), Joseph P. Hoag, and
Christine Hawkins, Davis Wright Tremaine LLP, Seattle,
Washington, for Plaintiffs-Appellees.

David Potts-Dupre and Jennifer Bush Hawkins, Potts-Dupre
Hawkins & Kramer Chtd., Washington, D.C., for Amicus
Curiae Reciprocal Administrator of the Electrical Industry
Pension Reciprocal Agreement.

Karl A. Schmidt, Richard A. Clark, Brenton F. Goodrich,
and Rudolph G. Klapper, Parker Milliken Clark O’Hara &
Samuelian APC, Los Angeles, California, for Amicus
Curiae Trustees of the Southern California IBEW-NECA
Pension Trust Fund.
                    LEHMAN V. NELSON                        5

                          ORDER

   The request to publish our disposition is GRANTED.
The memorandum disposition filed June 12, 2019 is
withdrawn and an authored opinion by Judge Ezra is filed
concurrently with this order.

    Pursuant to Circuit Rule 40-2, by granting the request for
publication, we have extended the time to file a petition for
rehearing to 14 days after the issuance of this order and,
because the mandate has already issued, any further petition
for rehearing shall be accompanied by a motion to recall the
mandate.

                         OPINION

EZRA, District Judge:

    The Trustees of the IBEW Pacific Coast Pension Fund
(the “Pacific Coast Fund” or the “Fund”) appeal the district
court’s order granting summary judgment in favor of
Employee Retirement Income Security Act of 1974
(“ERISA”) class action Plaintiffs-Appellees (the “Class”).
We affirm.

                              I.

    The underlying facts and procedural history in this case
were laid out by the Ninth Circuit in Lehman v. Nelson, 862
F.3d 1203 (9th Cir. 2017) (“Lehman I”). We repeat only the
relevant facts. In May 2008, the Trustees of the Pacific
Coast Fund (the “Trustees”) learned that the Fund would
soon enter “critical status” under the Pension Protection Act
of 2006. To respond, the Trustees twice amended the Pacific
6                    LEHMAN V. NELSON

Coast Fund Pension Plan (the “Pension Plan”)—in
Amendments 14 and 24. In relevant part, those amendments
had the effect of withholding at least $1.00 per hour from all
employer contributions in order to improve the funding
status of the Pacific Coast Fund. Thereafter, Richard
Lehman filed a putative class action against the Trustees
under ERISA. Lehman’s suit alleged that the Trustees
breached the terms of the Pension Plan, violated sections 204
and 305 of ERISA, and breached their fiduciary duties by
withholding $1.00 per hour from Lehman’s employer
contributions without providing any accrued benefit to him.

                              A.

    Lehman is an electrician who is a member of the Puget
Sound Electrical Workers Pension Trust (“Lehman’s Home
Fund”). His profession requires him to frequently travel
outside the jurisdiction of his home fund. It is common for
members of the electrical construction industry to work in
the jurisdictions of other local union pension funds. Such
members are referred to in the industry as “travelers.” When
travelers are temporarily employed outside their home fund,
their employers contribute to the local funds in the places
where they perform work.

    Because travelers would be better off with a single large
pension from their home jurisdiction’s fund than with
several small pensions from the fund in each jurisdiction
where they have worked, and because some travelers might
otherwise lose benefits as a result of their work in other
jurisdictions, the trustees of multiple local funds entered into
the Electrical Industry Pension Reciprocal Agreement
(“Reciprocal Agreement”).            Under the Reciprocal
Agreement, travelers can elect to have employer
contributions from other jurisdictions electronically
transferred to their designated home pension fund.
                     LEHMAN V. NELSON                          7

    Pursuant to the Reciprocal Agreement, participating
funds are required to keep a “separate account” of
contributions for each traveler and to transfer an equal
amount to all contributions received back into the traveler’s
home fund within thirty days of receipt. Participating funds
are prohibited from charging administrative fees “for the
transfer or for any other reason.” Under the Reciprocal
Agreement, travelers can accrue benefits in their home funds
for “[a]ll hours worked in any Participating Fund for which
Monies are transferred,” and the terms of their home pension
plans govern their benefit accrual.

    Additionally, the Reciprocal Agreement requires the
participating funds to “take all actions . . . necessary to fully
implement this Agreement.” Participating funds can amend
the Reciprocal Agreement at any time through “the written
approval of a proposed amendment by a simple majority”
vote of participating funds. Participating funds can also
terminate their participation in the Reciprocal Agreement by
following specified termination procedures. Finally, the
Reciprocal Agreement outlines a detailed dispute-resolution
process for participating funds to address any disagreements
or questions that arise out of the Agreement.

    Relevant here and in Lehman I, the Pacific Coast Fund is
a signatory to the Reciprocal Agreement, as is Lehman’s
Home Fund. Article 5 of the Pacific Coast Pension Plan
incorporates provisions from the Reciprocal Agreement into
the Pension Plan. In particular, section 5.04 of the Pension
Plan states that the Pacific Coast Fund “shall collect and
transfer to the Home Pension Fund all contributions received
on behalf of the Employee for work performed by the
Employee within [the Pacific Coast Fund’s] jurisdiction.”
8                   LEHMAN V. NELSON

                              B.

    The Pension Protection Act of 2006 (“PPA” or “Act”) is
designed to help severely underfunded multiemployer
pension plans recover. The Act—codified in relevant part at
ERISA section 305—requires plan actuaries for
multiemployer plans to annually certify “whether or not the
plan is or will be in critical status for such plan year or for
any of the succeeding 5 plan years” within ninety days of the
start of the plan year. 29 U.S.C. § 1085(b)(3)(A)(i). If the
plan is certified to be in critical status, ERISA section
305(a)(2)(A) requires the plan sponsor to “adopt and
implement a rehabilitation plan” formulated “to enable the
plan to cease to be in critical status by the end of the
rehabilitation period.” Id. § 1085(a)(2)(A), (e)(3)(A)(i).
The Act sets a deadline for plan sponsors to enact a
rehabilitation plan after critical status certification, id.
§ 1085(e)(1)(A), but it does not prohibit plan sponsors from
acting before certification to improve the plan’s funding
status.

                              C.

    In May 2008, the Trustees of the Pacific Coast Fund
enacted Amendment 14 in response to learning that the
Pension Plan was severely underfunded for 2009 and
subsequent plan years. Amendment 14 took effect on July
1, 2008, and added section 3.03(b) to the Pension Plan.
Section 3.03(b) states:

       Notwithstanding the foregoing or any other
       provision of the Plan to the contrary effective
       July 1, 2008, the first one dollar ($1.00) of
       required contribution for each and every
       Hour of Covered Work on and after July 1,
       2008, shall not result in any monthly benefit
                     LEHMAN V. NELSON                         9

       accrual and shall be utilized solely to improve
       the funding of the Plan. The same reduction
       is applicable for required Contributions
       pursuant to subscription agreements and
       reciprocal transfers for each and every hour
       on and after July 1, 2008. . . . The Trustees[’]
       intent in adopting this reduction is to improve
       the funding condition of the Plan and to
       encourage collective bargaining parties to
       recognize the need for increased hourly
       contributions to the Plan.

    Amendment 14 did not remove the language in section
5.04 of the Pension Plan governing transfers to travelers’
home pension funds, and the Trustees did not terminate their
participation in the Reciprocal Agreement nor seek to amend
it before enacting Amendment 14.

    On June 29, 2009, the Pacific Coast Fund’s actuary
certified that the Pension Plan was in “critical status” for the
plan year beginning April 1, 2009. As required by the PPA,
the Trustees adopted a formal rehabilitation plan on July 8,
2009, through Amendment 24. Amendment 24 added
several new provisions to the Pension Plan, including Article
16, which contained the Rehabilitation Plan itself. The
Rehabilitation Plan established a default schedule and two
alternative schedules describing required increases in
employer contributions and reduced benefit-accrual rates
that would take effect upon each schedule’s implementation.

    Among others, the default schedule and two alternative
schedules contain different increases in required
contribution levels from employers and different reductions
in benefit-accrual rates. Because travelers who work in the
Pacific Coast Fund’s jurisdiction on a temporary basis
10                     LEHMAN V. NELSON

accrue benefits in their home funds, they are not affected by
the changes in benefit-accrual rates for the Pension Plan, but
they are affected by Amendment 24 in other ways.

    First, Amendment 24’s Rehabilitation Plan imposed a
$1.00 hourly withholding from employer contributions for
contribution rates below $3.00 per hour. 1 Second, the
Rehabilitation Plan established an additional withholding of
all required increases in employer contributions and all
surcharge payments made in accordance with the PPA. 2 The
Rehabilitation Plan describes the required increases in
employer contributions as “non-benefit contributions,” and
explains the withholdings as follows:

         Participants who work inside the jurisdiction
         of this Fund and who have employer
         contributions sent to an outside fund under a
         “money follows the man” reciprocity
         agreement shall have the first dollar of each
         hourly contribution (for contributions rates
         less than $3.00 per hour), all increased non-
         benefit contributions under any Schedule and
         all employer surcharge contributions remain
         in the [Pacific Coast Fund] for funding

     1
      As we noted in Lehman I, the $1.00 hourly withholding in
Amendment 24 differs from that in Amendment 14 because Amendment
24 only applies to contribution rates less than $3.00 per hour while
Amendment 14 applies to all contribution rates.

     2
      The PPA mandates the imposition of an “employer surcharge” for
plans in critical status. See 29 U.S.C. § 1085(e)(7). The parties do not
dispute the Trustees’ right to withhold the surcharge payments under
Amendment 24.
                    LEHMAN V. NELSON                        11

       purposes only. These contributions result in
       no benefit accruals for any participant.

    Thus, with respect to travelers who work in the Pacific
Coast Fund’s jurisdiction on a temporary basis, the
Rehabilitation Plan requires employers to contribute
increasing amounts of money over time, classifies all
increases beyond the contribution rates in effect on July 22,
2009 as “non-benefit contributions,” withholds all non-
benefit contributions, withholds $1.00 per hour on employer
contributions of less than $3.00 per hour, and withholds
surcharge payments. While the amount of the increase in the
new “non-benefit contributions” and the corresponding
withholdings vary among the default and alternative
schedules, all three schedules require increased
contributions and state that these increases “shall be utilized
solely to improve the funding condition of the Plan.”

    Like Amendment 14, Amendment 24 did not delete or
otherwise alter the text of section 5.04—the Pension Plan
provision requiring transfer of all employer contributions
received on behalf of travelers (i.e., the “pass through”
contributions routed to the travelers’ home funds).
However, unlike Amendment 14, Amendment 24 added
sections to each preexisting article of the Pension Plan,
including Article 5, stating that “for all benefits commencing
on or after July 22, 2009, any provision in this Article which
is inconsistent with the requirements of Article 16, the
Rehabilitation Plan, shall be superseded by the provisions
contained within Article 16, except to the extent otherwise
required by applicable law or regulations.”

                              II.

   Between July 2008 and March 2009, the Pacific Coast
Fund withheld $1.00 per hour for each hour that Richard
12                  LEHMAN V. NELSON

Lehman worked in the Fund’s jurisdiction under
Amendment 14. In October 2013, Richard Lehman filed suit
on behalf of the Class “to recover reciprocity contributions
improperly withheld by the Defendants, and the earnings
thereon.” In the alternative, he requested “an accrued benefit
based on such contributions.” Lehman sought relief under
ERISA sections 502(a)(1)(B), (a)(2), and (a)(3), arguing that
he was entitled to the withheld contributions under the terms
of the Pension Plan, that the Trustees violated ERISA
sections 204 and 305 through the $1.00 hourly withholding,
and that the Trustees breached their fiduciary duties by
improperly administering the Plan.

                              A.

     In Lehman I, the Trustees argued that they could keep the
$1.00 hourly withholdings they had made pursuant to
Amendment 14, rather than including at $1.00 per hour in
the transfer payments made to travelers’ home funds,
because those withholdings were not “contributions” within
the meaning of the Reciprocal Agreement. 862 F.3d at 1217.
We rejected that argument, holding that the Trustees’
interpretation of Amendment 14 would conflict with and
render nugatory section 5.04 of the Plan, and that
Amendment 14 can be read consistently with Article 5 only
if it applies to transfers into the Pacific Coast Fund and does
not apply to the “pass through” payments transferred out of
the Pacific Coast Fund to the travelers’ home funds. Id. at
1217–18. We thus affirmed the district court’s orders
granting summary judgment to Lehman and awarding
damages to the Class for all contributions withheld under
Amendment 14. Id. at 1218.

   Additionally, relevant to this appeal, we held that only
Amendment 14 was fully litigated in the district court
because the complaints, summary judgment briefing, and the
                    LEHMAN V. NELSON                        13

district court’s order did not specifically address that the
Class sought to recover contributions withheld under
Amendment 24, particularly the withholding of increased
employer contributions under the default and alternative
schedules in the Rehabilitation Plan. Id. at 1211–13. We
remanded this part of the appeal back to the district court on
this issue. In so doing, we noted that “[i]f the district court
determines on remand that the [Class is] entitled to the
transfer of all contributions withheld under Amendment 24
based on the terms of the Pension Plan, as it did with respect
to Amendment 14, then it need not determine whether the
default and alternative schedules in the Rehabilitation Plan
violated ERISA’s minimum accrual requirements.” Id.
at 1220.

                              B.

    Upon remand, the district court determined that
Amendment 24 violates the plain language of Article 5 of
the Plan. The court explained that “[s]ection 5.04 mandates
that the Pension Plan collect and transfer ‘all contributions
received on behalf of the Employee.’” Lehman v. Nelson
(“Lehman II”), No. C13-1835RSM, 2018 WL 333202, at *5
(W.D. Wa. Jan. 9, 2018) (quoting section 5.04). The court
agreed with the Class that the Trustees cannot “simply label
the collectively bargained contributions ‘benefit’ and ‘non-
benefit contributions’ to get around Article 5 of the Plan, and
that nothing in the Pension Protection Act prohibits or
requires Defendants or the Pacific Coast Plan to use
reciprocity contributions to fund the Pacific Coast Plan.” Id.
14                     LEHMAN V. NELSON

The court again granted summary judgment in favor of the
Class. 3 The Trustees again appealed.

                                 III.

    “Where an ERISA Plan grants discretionary authority to
determine eligibility for benefits or to construe the terms of
the plan, a plan administrator’s interpretation of a plan is
reviewed for abuse of discretion.” Lehman I, 862 F.3d at
1216 (quoting Tapley v. Locals 302 & 612 of Int’l Union of
Operating Eng’rs-Emp’rs Constr. Indus. Ret. Plan, 728 F.3d
1134, 1139 (9th Cir. 2013)). We review the district court’s
application of this standard and the district court’s grant of
summary judgment de novo. See id. On appeal, the Class
contends that we should review the Trustees’ interpretation
of Amendment 24 de novo because the issue in this case is
purely a legal question and does not concern any
interpretation of the Plan. As in Lehman I, see 862 F.3d
at 1216–17, we need not decide this issue because the
Trustees’ arguments in support of their interpretation of
Amendment 24 fail even under the deferential abuse-of-
discretion standard.

                                 IV.

   The district court properly granted summary judgment in
favor of the Class. The Trustees argue that Amendment 24
specifically created “non-benefit contributions” and
excluded those from the definition of “contributions” for
which contributions would need to be made to a traveler’s
home fund. Just like the Trustees’ interpretation of
     3
     Although the Trustees raised a dispute as to whether Lehman was
an adequate class representative for this claim, they later agreed that
Michael Puterbaugh could be a named representative and that this
change mooted this adequacy dispute.
                        LEHMAN V. NELSON                               15

Amendment 14 in Lehman I, however, the Trustees’
interpretation of Amendment 24 with regard to travelers’
contributions is inconsistent with the Pacific Coast Plan’s
own definition of “contribution” found in section 1.04, and
conflicts with and renders nugatory section 5.04.

    Section 5.04 of the Pension Plan incorporates the
Reciprocal Agreement signed by the Pacific Coast Fund.
Pursuant to section 5.04, travelers’ contributions are simply
pass-through contributions made to the travelers’ home
funds and are not assets of the Pacific Coast Fund. The
Trustees’ attempts to distinguish “benefit” and “non-
benefit” contributions pursuant to collective bargaining
agreements are unavailing—any contributions on behalf of a
traveler must be passed through under the Plan. Because
travelers’ contributions do not belong to the Pacific Coast
Fund, the district court’s order did not violate the Pension
Protection Act of 2006. 4

    AFFIRMED.

    4
      Although the Trustees’ opening brief mentions “fiduciary duties,”
it does not offer any argument based on fiduciary duties. Any such
argument has therefore been forfeited. See Navajo Nation v. U.S. Forest
Serv., 535 F.3d 1058, 1079 n.26 (9th Cir. 2008) (en banc) (“It is well-
established that a bare assertion in an appellate brief, with no supporting
argument, is insufficient to preserve a claim on appeal.”).