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FLYNN v. LOCAL ONE AMALGAMATED LITHOGRAPHERS OF AM

April 14, 1998

JAMES FLYNN, Plaintiff, against LOCAL ONE AMALGAMATED LITHOGRAPHERS OF AMERICA AND SICKNESS AND ACCIDENT FUND, Defendant.

Robert L. Carter, U.S.D.J.


The opinion of the court was delivered by: CARTER

ROBERT L. CARTER, District Judge

This action is brought by the plaintiff, James Flynn, a former member of Local One, Amalgamated Lithographers of America ("Local One"), on grounds that he was wrongfully denied retirement medical benefits by the defendant, Local One's Sickness and Accident Fund (the "Fund"). *fn1" The plaintiff argues that the Fund's denial of his request for retirement benefits pursuant to the eligibility rules of its employee benefits plan (the "Plan") is actionable under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), 29 U.S.C. § 1001 et. seq. *fn2" In addition, the plaintiff argues that the Fund committed fraud by failing to give him proper notice of the rules of eligibility for benefits. In any event, plaintiff argues, the Fund is estopped from denying him coverage because its trustees led him to believe that he would receive them. Plaintiff seeks an order compelling the Fund to provide him with medical coverage, to reimburse him for medical expenses heretofore incurred, and to pay his costs and attorney's fees. However, the Fund denies that its actions regarding plaintiff's request for retirement benefits were unlawful.

 Cross-motions for summary judgment are brought by the plaintiff and defendant pursuant to Rule 56, F. R. Civ. P. The plaintiff argues that he is entitled to summary judgment on his claims as a matter of law, as there are no genuine issues of material fact to be tried in this case. Likewise, the defendant contends that there are no genuine issues of material fact to be tried, but argues that the Fund, rather than the plaintiff, is entitled to summary judgment.

 I. Background

 From July 1956 until March 1991, a period of more than thirty-five years, the plaintiff worked for employers who were parties to collective bargaining agreements with Local One and who were contributors to the Fund. (Def. Memo. of Law at 6). As an employee of contributors to the Fund, the plaintiff was entitled to medical coverage provided by the Fund. Id.

 Due to unfavorable employment conditions for union workers in his industry, the plaintiff worked in non-union shops from March 1991 to September 1995. (Pl. Brf. at 6). These employers were not contributors to the Fund. (Def. Memo. of Law at 6). Therefore, no contributions to the Fund were made on plaintiff's behalf for the period in question, which endured for more than four years. Id. *fn3"

 In a letter dated November 7, 1994, the plaintiff requested that he be granted retirement medical benefits upon his retirement from his current employer, which was not a contributor to the Fund. Id. In the letter, Flynn acknowledged that he did not appear to qualify for the retirement benefits he requested since the Plan's eligibility rules stated that "an individual must have at least 25 consecutive years of service in the fund, and may not be separated from said fund for more than 1 year prior to retirement" in order to receive the benefits in question Id. at 7 (emphasis added). While admitting that the Fund's trustees had adopted the rule requiring 25 consecutive years of employment in "good faith" and that he did not meet this criterion, the plaintiff wrote that he was entitled to retirement benefits, nevertheless. Because the factor disqualifying him from benefits--his four years of work with employers who were not contributors to the Fund--had been caused by circumstances beyond his control, i.e. unfavorable employment conditions in his industry for union members, the plaintiff argued that it would be justifiable for the Fund to make an exception to the consecutive employment rule on his behalf and allow him to receive benefits. (Affidavit of Colleen Magurno, Exbt. C).

 On December 21, 1994, the Fund's trustees *fn4" considered the plaintiff's request for retirement benefits and determined that he was ineligible. (Def. Memo. of Law at 7). The trustees' determination that the plaintiff was ineligible for benefits was based on their interpretation of the Plan's Retirement Provision *fn5" together with the "break in service" *fn6" and "Scutari" rules. *fn7" The consequence on employees' eligibility for retirement benefits of the trustees' interpretation of the Retirement Provision in light of the break in service and Scaturi rules was the following: (1) an individual remained eligible for benefits if breaks in coverage of up to one year occurred at any point in his career, (2) an individual remained eligible for benefits if breaks in coverage exceeded one year if such breaks occurred in the middle of his career; however, under such circumstances, benefits would only be provided to the retiree, not his dependents, and (3) an individual would be ineligible for benefits if he experienced a break in coverage that exceeded one year if the lapse in coverage occurred near his retirement. (Def. Memo. of Law at 6). Consistent with this interpretation of the Plan's eligibility rules, the plaintiff, who had accumulated well over 300 months of service and who would meet the age requirement upon his retirement in 1995, *fn8" nevertheless was deemed ineligible for benefits. The plaintiff was ineligible because he would not have been covered under the Plan, (i.e. he would not have worked for an employer who was a contributor to the Fund), for more than one year (i.e. four years) prior to his retirement. (Def. Memo. of Law at 7).

 The trustees' determination that plaintiff was ineligible for benefits was consistent with decisions that the Fund made regarding the eligibility of several other individuals in 1994 and 1995. Id. For instance, the Fund determined that Dominick Lotito, John Cunningham, and John Lundy, like the plaintiff, were ineligible for benefits. Although Lotito worked in covered employment from 1951 to 1991, he was deemed ineligible for benefits because he did not work for an employer who contributed to the Fund from July, 1991 through his retirement in January of 1995. Id. Cunningham worked in covered employment from 1959 through May, 1987, but failed to qualify for benefits because he did not work for a participating employer from June, 1987, through his retirement in June, 1995. Id. Lundy worked in covered employment from 1955 through May 1992, and was employed from May, 1992 through his retirement in October, 1994. Id. Although he continued to pay dues to Local One, Lundy was deemed ineligible for benefits because he was not covered by the Fund for too long a period prior to his retirement. Id. On the other hand, the Fund determined that Albert Fiorvanti and Lawrence Conti were eligible for retirement benefits. Id. at 8. Unlike Flynn, Lotito, Cunningham, and Lundy, Fiorvanti and Conti, after breaks in service in excess of one year, had returned to covered employment prior to retirement. Id.

 Although the trustees denied the plaintiff's request for benefits, they subsequently decided to relax their interpretations of the Retirement Provision and the break in service and Scaturi rules to the benefit of individuals such as the plaintiff who had worked in covered employment for substantially more than 25 years. Id. Having determined that the proposed changes in eligibility requirements were actuarialy sound, the Fund, on September 8, 1995, amended the eligibility rules for benefits, retroactive to January 1, 1995. Id. at 9. Under the amended break in service rule, retirees with 35 years of employment are permitted breaks in coverage of up to 36 months, and retirees with 40 years of covered employment were permitted unlimited breaks in coverage. Id. These breaks were permitted at any point in an individual's career, including immediately prior to retirement. Id. Under the amended Scaturi rule, an individual was entitled to retirement benefits (excluding dependents) even if he or she had a break in excess of those allowed under the amended break in service rule, provided that the individual returned to covered employment after his break for a period which exceeded by at least one year the period of that break. Id.

 Even with these significant amendments to the eligibility rules, the plaintiff still did not qualify for benefits. He was not eligible for benefits under the amended break in service rule because his four-year break exceeded permissible breaks for those with less than forty years of service. Id. The plaintiff continued to be ineligible for benefits under the amended Scaturi rule because after his four-year break he had not returned to covered employment prior to retirement. Id. at 10.

 Plaintiff faults the Fund for his failure to qualify for benefits under the amended rules. He argues that the Fund's failure to notify him of changes in the rules made it impossible for him to plan for his retirement in a manner that would allow him to benefit from the amendments to the eligibility rules. (PI. Reply Brf. at 3). Plaintiff maintains that his understanding of his retirement benefits was derived from his benefits manual, which contained only the language of the Retirement Provision, making no mention of the Scatari or break in service rules. Id. at 4. Thus, plaintiff argues, he was informed too late--years after he had accepted a non-union position--that he would lose his retirement benefits if he failed to work for an employer who was not a contributor to the Fund. Id. From the Fund's alleged failure to give him proper notice of the eligibility rules, plaintiff deduces that changes in the trustees' interpretations of the Retirement Provision that were occasioned by the Scaturi and break in services rules were made only for "favored status" members. Id.

 The plaintiff also argues that the Fund failed to inform him (and other rank and file members of Local One who had accrued a great deal of seniority) of the Plan's eligibility requirements because it was in the Fund's financial interests to do so. Id. at 5. That is, the plaintiff contends that Local One conspired with the Fund to deprive him (and others) of work in a union shop during the four-year period in which he worked for non-union employers who were not contributors to the Fund in order to avoid paying the retirement benefits due him. Id. at 5-6.

 The plaintiff faults particular oral representations made by certain employees of the Fund concerning his failure to qualify for retirement benefits, as well. Specifically, he claims that Joe Calderone, a Fund trustee, and Pat Lopresti, a Fund trustee and president of Local One, made representations that led him to believe that he would receive benefits upon his retirement. (Def. Stmnt. of Facts at 8). Lopresti allegedly told the plaintiff that he would personally work on the plaintiff's behalf to ensure that he received benefits, ...


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