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Saladino v. I.L.G.W.U. National Retirement Fund and Theodore Bernstein

February 8, 1985

ANTHONY SALADINO, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFF-APPELLANT ,
v.
I.L.G.W.U. NATIONAL RETIREMENT FUND AND THEODORE BERNSTEIN, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY AS DIRECTOR OF THE I.L.G.W.U. NATIONAL RETIREMENT FUND, DEFENDANTS-APPELLEES



Appeal from an order of the United States District Court for the Southern District of New York (Whitman Knapp, Judge) denying the plaintiff's motion for attorney's fees pursuant to 29 U.S.C. § 1132(g)(1) (1982), Employee Retirement Income Security Act of 1974. Affirmed.

Author: Winter

Before FRIENDLY, VAN GRAAFEILAND and WINTER, Circuit Judges.

WINTER , Circuit Judge:

The plaintiff, Anthony Saladino, appeals from Judge Knapp's denial of his motion for attorney's fees. Saladino's claim for fees arose from an action he brought under the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001-1461 (1982) ("ERISA"), against the International Ladies' Garment Workers' Union National Retirement Fund ("Fund") and Theodore Bernstein, its director, to obtain a copy of the Fund's pension plan. After the case was settled by the Fund's agreement, inter alia, to provide a copy of the plan to Saladino, he sought attorney's fees pursuant to ERISA 29 U.S.C. § 1132(g)(1). The district court denied attorney's fees on the grounds that Saladino was not a "participant" as defined by ERISA 29 U.S.C. § 1002(7) and accordingly was not eligible for such an award. We affirm.

BACKGROUND

Saladino was a member of the I.L.G.W.U. for thirty-three years. His last employment as a union member was in 1966 at the age of 53. In October, 1981, Saladino wrote to the Fund and requested information on how to apply for a pension. In his letter he stated that he left covered employment in 1966 and that he was now 67 years old. The Fund responded, by letter dated November 5, 1981, informing plaintiff that he was not, nor would he become, eligible for pension benefits from the Fund, and provided plaintiff with a copy of a summary plan description which explained the Fund's pension eligibility requirements prepared in the manner and for the purposes prescribed by ERISA 29 U.S.C. § 1022.*fn1 Prior to the enactment of the Employee Retirement Income Security Act, an employee for whom contributions had been made to the Fund was entitled to pension benefits only if he met a twenty-year minimum service requirement and retired after he reached the age of 65 or, after 1970, the age of 62. As of January, 1976, ERISA introduced mandatory vesting standards and provided that employees who met a ten-year service requirement were entitled to pension benefits when they reached age 62 if they had retired on or after January, 1976.

In March, 1982, Saladino, through attorneys, requested copies of the full plan as of 1979, when he reached the age of 64, and 1966, when he retired. The following month, the Fund sent Saladino a short description of the eligibility requirements as they stood in 1966, but no copy of the full plan. Saladino immediately responded with another request for copies of the plan in 1966 and 1979, mentioning that ERISA required pension plans to provide a copy of the plan to him. 29 U.S.C. § 1024(b)(4).*fn2 None of Saladino's attorneys' correspondence provided facts to support a claim of eligibility under the terms of the summary plan description, however. In May, the Fund informed Saladino that he had no right to a copy of a plan because he was not eligible for a pension and therefore not a participant within the language of ERISA 29 U.S.C. § 1024(b)(4). The Fund stated, however, that if Saladino could provide additional facts bearing on his eligibility, it would reconsider its position.

In March, 1983, Saladino filed a class action against the Fund in the district court. He alleged that the Fund was not complying with ERISA's disclosure requirements and had thus breached its fiduciary duty to the plan participants. He sought an injunction requiring compliance with ERISA's disclosure provisions, damages of $100 per day as permitted by ERISA 29 U.S.C. § 1132(c), $5,000 in punitive damages, attorney's fees, and costs. Negotiations appear to have begun almost immediately and, in September, the district court approved a settlement and dismissed the case. In the settlement agreement, the Fund denied all liability but agreed to supply a copy of the plan or plan summary for a reasonable charge to anyone who claimed to have held a job in covered employment since 1965. The Fund also gave Saladino a copy of the plan. Saladino dropped his claims based on non-disclosure, but retained his right to pursue other claims.

One of the claims Saladino did not settle was that for attorney's fees under ERISA 29 U.S.C. § 1132(g)(1). His attorneys, employees of non-profit organizations providing legal services, insisted that the attorney's fees issue be omitted from the settlement agreement on ethical grounds.

In November, 1983, Saladino moved in the district court for attorney's fees. The district court denied the motion because Saladino was not a "participant" as defined in ERISA 29 U.S.C. § 1002(7) and thus did not have a right to claim attorney's fees under 29 U.S.C. § 1132(g)(1). The district court held that, to be a participant, Saladino either had to make a credible showing that he was vested or that he intended to return to covered employment. We affirm.

Discussion

ERISA 29 U.S.C. § 1132(g)(1) states that "[i]n any action under this subchapter . . . by a participant, beneficiary, or fiduciary, the court in its discretion may allow a reasonable attorney's fee and costs of action to either party" (emphasis supplied). The term participant is of considerable importance within ERISA's statutory scheme because numerous rights under that scheme are limited to those who are included within that term. In addition to eligibility for attorney's fees under § 1132(g)(1), participants must be sent plan documents at specified times and intervals, § 1024(b)(1); may examine such documents at any time at specified places, § 1024(b)(2); must be sent annual financial information, § 1024(b)(3); must be sent on request copies of plan documents, § 1024(b)(4); must be sent on request once a year information as to the participant's accrued and nonforfeitable benefits, § 1025(a); and can enforce through a civil action in the federal courts ERISA rights, § 1132. The term "participant" itself is defined by 29 U.S.C. § 1002(7) as "any employee or former employee of an employer, or any member or former member of an employee organization, who is or may become eligible to receive a benefit. . . ."

We believe that participant is limited to either employees in, or reasonably expected to be in, currently covered employment or former employees with a colorable claim to vested benefits. This view attributes conventional meanings to the statutory language since all employees in covered employment and former employees with a colorable claim to vested benefits "may become eligible." A former employee who has neither a reasonable expectation of returning to covered employment nor a colorable claim to vested benefits, however, simply does not fit within the term "may become eligible."

Our view, moreover, is the only one consistent with the role accorded by the statutory scheme to those who fall within the term participant. The mandatory requirement that plans send certain documents at specified intervals and annual financial information to participants strongly suggests that this group must be easily identifiable and one with a substantial interest in the matters conveyed. Current employees or those reasonably expected to become such and persons with a colorable claim to vested benefits are in that category. Expansion of the group to former employees of many years past or others with no colorable claim to benefits would create uncertainties as to statutory obligations and impose great costs on pension plans for no legislative purpose. Similarly, the provision that plans inform participants who so request of their accrued and nonforfeitable benefits implies that the persons entitled to such disclosure have a demonstrable claim. We believe, therefore, that Congress intended the term participant to limit the various reporting and disclosure obligations imposed on plans to identifiable persons with a substantial interest ...


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