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Riley v. Meba Pension Trust

decided as amended.: December 15, 1977.

WILLIAM J. RILEY, PLAINTIFF-APPELLANT,
v.
MEBA PENSION TRUST, DEFENDANT-APPELLEE



Appeal from an order of the District Court for the Southern District of New York, Lloyd F. MacMahon, Judge, granting defendant's and denying plaintiff's motion for summary judgment in an action for a declaratory judgment that defendant could not lawfully suspend retirement benefits of plaintiff, a port engineer, because of his having become a civil service employee of the United States Maritime Administration.

Friendly, Gurfein and Meskill, Circuit Judges.

Author: Friendly

FRIENDLY, Circuit Judge:

Plaintiff, William J. Riley, retired from employment as a port engineer for United States Lines, Inc., on May 1, 1975. If nothing else had happened, he would concededly have been entitled to receive from defendant MEBA Pension Trust a pension benefit of $949.68 per month. Prior to his retirement Riley had written the trustees of the MEBA plan that he was being considered for a civil service position in the United States Department of Commerce, Maritime Administration, Office of Ship Construction, as an Assistant Construction Representative;*fn1 he sought a waiver from a provision in Article II A, § 13 of the Plan's Regulation quoted in the margin.*fn2 The trustees declined to issue the waiver and, when Riley obtained the government post, refused to pay his pension so long as he remained so employed.

Riley thereupon brought an action in the District Court for the Southern District of New York for a declaratory judgment that he was entitled to receive his pension benefits. Federal jurisdiction was predicated on § 502(f) of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1132(f). The complaint alleged that the trustees' interpretation of Article II A, § 13 to include a Federal civil service job as "future service in the American Flag or Foreign Flag Maritime Industry" was erroneous and that the plan was discriminatory in providing for a suspension of benefits for marine engineers whose pensions had been earned in part by land based employment and who had then obtained another job in the maritime industry, whereas marine engineers who retired after a life spent entirely at sea were prohibited only from taking further employment as seamen. Both plaintiff and defendant moved for summary judgment. In his memorandum in support of the summary judgment motion, plaintiff added yet another claim, arguing that denial of his pension during his government service violated § 203(a)(3)(B)(ii) of ERISA, 29 U.S.C. § 1053(a)(3)(B)(ii), which provides:

(B) A right to an accrued benefit derived from employer contributions shall not be treated as forfeitable solely because the plan provides that the payment of benefits is suspended for such period as the employee is employed, subsequent to the commencement of payment of such benefits -

(ii) in the case of a multiemployer plan, in the same industry, in the same trade or craft, and the same geographic area covered by the plan, as when such benefits commenced.

The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this subparagraph, including regulations with respect to the meaning of the term "employed".

In a memorandum and order, Judge MacMahon granted defendant's motion and denied plaintiff's. The judge thought that the ERISA provision was of no avail to Riley since it "establishes the conditions under which the right to an accrued benefit shall not be treated as forfeitable and does not specify under what circumstances a benefit may properly be suspended."

In so holding the court fell victim to the not uncommon error of reading technical pension language as if it were ordinary English speech. Cf. Gediman v. Anheuser Busch, Inc., 299 F.2d 537, 544-45 (2 Cir. 1962). Section 203(a)(3)(B)(ii) must be read in context. Section 203, 29 U.S.C. § 1053, entitled "Minimum Vesting Standards," begins by requiring each pension plan to "provide that an employee's right to his normal retirement benefit is nonforfeitable upon the attainment of normal retirement age . . ." and goes on to provide that the employee's rights in an accrued benefit derived from his own contributions must be nonforfeitable and that as regards employer contributions, the employee's rights must be nonforfeitable if he has met certain requirements relating to age and years of service which Riley concededly has done. Section 3(19), 29 U.S.C. § 1002(19), defines "nonforfeitable" as meaning, among other things, a claim "which is unconditional and which is legally enforceable against the plan." The provision of Article II A, § 13, quoted above, fn. 2, places a condition on Riley's claim to the monthly benefits to which he would otherwise be entitled and makes his claim legally unenforceable against the Plan; it thus constitutes a forfeiture within the meaning of ERISA. This is nonetheless true because, despite the contrary thrust of the language of the plan, the trustees are willing to pay the benefits if Riley quits his government job. The installments accruing in the interim have nonetheless been forfeited, as presumably would be clear to everyone if this were a case in which the pensioner died while in government service and thus was deprived of all benefits accruing after his suspension or if the pension were derived in part from his own contributions. When § 203(a)(3)(B) provides that certain kinds of suspensions are not forfeitures, it necessarily implies that those not falling within its terms are. Cf. Keller v. Graphic Systems of Akron, Inc., 422 F. Supp. 1005, 1008 (N.D. Ohio 1976) (concluding that when ERISA applies, since forfeitures because of post-termination competitive employment are not excepted they are prohibited); 1 CCH Pension Plan Guide para. 2584 (forfeitures for cause). If the language of the statute left any doubt that Riley is entitled to prevail unless the conditions of § 203(a)(3)(B)(ii) have been met, this would be removed by the portions of the Conference Report quoted in the margin.*fn3

The question then is whether Riley is now "employed in the same industry, in the same trade or craft and the same geographic area covered by the plan . . . ." The defendant appears to believe we must answer that question just as we would answer the related question concerning the interpretation of Article II A, § 13 of the Plan's Regulations. The belief is unfounded. Article IV, § 4 of the Plan provides:

4. Coverage and Eligibility. The Trustees, by majority vote, shall have full authority to determine all questions of coverage and eligibility to participate in and receive the benefits of the Plan and shall have the power to construe the provisions of this Agreement and the terms used herein and any such questions so determined or any construction so adopted by the majority of the Trustees shall be binding upon all parties and persons concerned.

When such a power has been conferred, the judicial role is limited to determining whether the trustees' interpretation was made rationally and in good faith - not whether it was right. Danti v. Lewis, 114 U.S. App. D.C. 105, 312 F.2d 345 (1962); Beam v. International Org. of Masters, Mates and Pilots, 511 F.2d 975, 979-80 (2 Cir. 1975); Gomez v. Lewis, 414 F.2d 1312, 1313-14 (3 Cir. 1969). With respect to § 203(a)(3)(B)(ii), however, the question - at least until the Secretary of Labor issues regulations - is what Congress meant, not what the Plan meant, and we must treat this as we would any other question of statutory construction.

In contrast to words like "forfeitable" and "vesting," which have a meaning in the pension lexicon quite different from that in ordinary speech, Congress returned to the vernacular when it spoke of "the same industry" and "the same trade or craft." Despite the enormous growth of the public sector, government is not commonly regarded as an "industry"; certainly it is not considered to be "the same industry" as businesses conducted for profit.*fn4 It is true that employment by the government in a task similar to that which port engineers perform for private employers may involve the same evil of " double-dipping," i.e., a pensioner's taking a job that would otherwise have been available to a member of the union who had not retired, as private employment would. The Trustees say that this was the evil at which Art. II A, § 13 was aimed, and they argue that § 203(a)(3)(B)(ii) should be construed accordingly. But it would be sheer speculation to assume that Congress wished courts to depart so far from the ordinary meaning of its language; for all we know Congress might have been happy to have a body of skilled pensioners willing to work for the Government at federal salaries. We need not now decide how Riley would fare if the Secretary of Labor were to issue regulations that would construe "in the same industry" to include government employment; whatever the dubieties concerning the respect owing to agency regulations when challenged as exceeding statutory authority, see 1 Davis, Administrative Law Treatise, §§ 5.03-.05 (1958); Administrative Law of the Seventies §§ 5.03-.05 (1976), at least they are entitled to some, ...


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