The opinion of the court was delivered by: Naomi Reice Buchwald, United States District Judge.
A. The Defendants and the Pension Plan's Benefit Structures
The material facts are not in dispute. Defendant Pension Plan is a
joint labor-management trust fund that administers a defined-benefit,
multi-employer employee pension plan for the benefit of employee
longshoremen and their beneficiaries. Defendants' Statement of Undisputed
Material Facts ("Defs.' 56.1 Statement"), ¶¶ 1-2; Pl.'s Compl.,
¶ 7. Defendants' Trustees are the administrators of that plan. Defs.'
56.1 Statement, ¶ 4.
The Pension Plan has been modified several times since its inception in
1950. From 1950 to the enactment of ERISA in 1974, the Pension Plan had a
single benefit structure providing for the payment of a flat monthly
sum, called a Service Retirement Pension ("SRP"). 1950 Agreement and
Declaration of Trust and Plan of the NYSA-ILA Pension Trust Fund and Plan
("1950 Plan"), A201;*fn2 Defs.' 56.1 Statement, ¶ 8. Eligibility
for the SRP was originally limited to those 65 years of age or older who
had been continuously employed in the industry for at least 25 years and
were actively employed at the time of their retirement. Defs.' 56.1
Statement, ¶ 9; 1950 Plan, A193-94. The amount of the SRP has
increased over the years, paying a maximum monthly benefit of $950 in
1983, $1,045 in 1986 and $1,250 in 1992 based on 40 years of credited
service. Defs.' 56.1 Statement, ¶ 10.
Under the terms of the 1950 plan, an employee's employment in the
industry was deemed "terminated" and "shall no longer be considered
continuous" when the employee has worked fewer than 400 hours a year for
more than two calendar years, subject to certain exclusions not
applicable to the present litigation. 1950 Plan, A194. This is an example
of a so-called "break-in-service" provision.
After the enactment of ERISA, the Pension Plan was modified to
provide an additional Vested Rights Pension ("VRP") for those who
did not meet the eligibility requirements of the SRP. Defs.' 56.1
Statement, ¶ 12. The VRP provides benefits according to the
(a) For years of credited service in the industry prior
to January 1, 1976, he shall receive 1-1/2% of the
maximum monthly benefit in effect at the time he ceased
employment in the industry, multiplied by years of
credited service earned prior to January 1, 1976, [PLUS]
(b) For years of credited service after January 1,
1976, he shall receive 3% of the maximum monthly
benefit in effect at the time he ceased employment in
the industry, multiplied by the number of years of
credited service earned on or after January 1, 1976,
[PLUS] 3% of (a) above multiplied by the number of
years of credited service after January 1, 1976.
(c) in no event shall a participant receive more than
100% of the maximum monthly benefit in effect at the time
he ceased employment in the industry.
1985 Plan, A270; 1995 Plan, A388-89.*fn3
Under the plan, a "year of credited service" is defined as:
(1) for years prior to October 1, 1978, any year in which
a participant had at least 400 hours of employment in the
industry provided that such participant had an average of
700 hours employment per year during such years prior to
October 1, 1978 and provided further no credit shall be
given for any year(s) of employment occurring prior to a
break in service which break in service occurred prior to
January 1, 1976; and
(2) commencing October 1, 1978, any year in which a
participant has at least 700 hours of employment in the
1985 Plan, A228-29; 1995 Plan A351-52. Thus, the post-ERISA versions of
the Plan retain the break in service provision of the 1950 Plan.
On November 14, 1995, the Plan was again amended, retroactive to
January 1, 1976. 1995 Amendment, A122-23. As amended, the 1995 Plan
provided that all vested participants would accrue*fn4 benefits in
accordance with the VRP benefit formula above, and further provided that
those eligible for the SRP and the VRP at retirement would receive the
greater of the two benefits.*fn5 Id.
After the adoption of the 1995 Amendment, the Plan's actuary reviewed
the Plan's records, and provided retroactive adjustments to some
without interest. Defs.' 56.1 Statement, ¶¶
30-31; Affidavit of Joseph Rossetti, Executive Director of the Pension
Plan ("Rosetti Aff."), ¶¶ 24-25. Defendants' actuary asserts, and
plaintiff does not dispute,*fn6 that the defendants have made all
adjustments required by the 1995 Amendment for all beneficiaries.
Affidavit of Susan E. Lee, actuary at the Segal Company, ("Lee Aff."),
Effective October 1, 1996, the Plan was amended to replace the previous
SRP benefit formula with an accrued benefit of $50 per month for each
year of credited service up to a maximum of $2,000 per month based on 40
years of credited service for those retiring after the effective date.
Defs.' 56.1 Statement, ¶ 11, 1999 SPD, A551. Those retiring before
October 1, 1996 continue to receive benefits based on the VRP formula in
the 1995 Plan, as amended. The effect of this most recent amendment is
not challenged in the present action, as plaintiff retired before its
effective date. Thus, we do not address the question of whether the
Plan's new benefit structure satisfies ERISA's requirements.
Accordingly, all references to the Plan, unless otherwise specified, are
to the 1995 Plan, as amended. We now turn to the plaintiff and his
Plaintiff, a former longshoreman, receives a lifetime pension from the
Pension Plan. Plaintiff's Statement Pursuant to Local Rule 56 ("Pl.'s
56.1 Statement"), ¶ 1. Plaintiff first worked under the plan in
1953, and had sufficient hours under the terms of the plan to earn a year
of credited service for each of the following thirteen years: 1953-60,
1963, 1965 and 1967-69. Pl.'s 56.1 Statement, ¶ 4. Plaintiff also
worked sufficient hours to earn a year of credited service for the years
1973-74 and 1976-81, 1985 and 1986. Id. ¶ 3. In each of three
consecutive years from 1970 through 1972, plaintiff failed to work a
sufficient number of hours to earn a year of credited service, Id.,
¶ 5, and under the terms of the plan then in effect, suffered a break
in service. 1950 Plan, A194.
The Board ruled that the plaintiff had only 10 years of credited
service and was therefore not eligible for the SRP, but only for the
VRP. November 14, 1995 Minutes of the Board, A104-111. Thus, defendants
awarded plaintiff a VRP pension in the amount of $263.38 per month based
on ten years of credited service subsequent to 1972, disregarding
plaintiff's first 13 years of credited service under the break in service
provision of the 1950 Plan. Pl.'s 56.1 Statement, ¶¶ 1, 4. Defs.' 56.1
Statement, ¶ 21.
Plaintiff filed a nineteen count complaint challenging the Board's
calculation of his pension and alleging various violations of ERISA.
Claims one through ten seek class relief, while claims eleven through
nineteen seek individual relief.*fn7 Six of the
original nineteen claims
were subsequently abandoned by the plaintiff or deemed moot by the
parties.*fn8 Defendant seeks summary judgment on the thirteen remaining
claims, while plaintiff seeks partial summary judgment on his first,
second and eleventh claims. After setting forth the appropriate standard
of review,*fn9 we turn first to the plaintiff's individual claims,
followed by his class claims.
I. Sunuary Judgment Standard
Summary judgment is properly granted "`if the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to material
fact and that the moving party is entitled to judgment as a matter of
law.'" R.B. Ventures, Ltd. v. Shane, 112 F.3d 54. 57 (2d Cir. 1997)
(quoting Fed. R. Civ. P. 56(c)). The Federal Rules of Civil Procedure
mandate the entry of summary judgment "against a party who fails to make
a showing sufficient to establish the existence of an element essential
to that party's case, and on which that party will bear the burden of
proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
In reviewing the record, we must assess the evidence "in the light most
favorable to the non-movant and . . . draw all reasonable inferences in
his favor." Delaware & Hudson Ry. Co. v. Consolidated Rail Corp.,
902 F.2d 174, 177 (2d Cir. 1990). The mere existence, however, of an
alleged factual dispute between the parties will not defeat a motion for
summary judgment. In order to defeat such a motion, the non-moving party
must affirmatively set forth facts showing that there is a genuine issue
for trial. Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 256 (1986). An
issue is "genuine . . . if the evidence is such that a reasonable jury
could return a verdict for the nonmoving party." Id. at 248 (internal
II. Plaintiff's Individual Claims
A. Application of the Plan's Pre-ERISA Break in Service
Rules to Plaintiff's Accrued Benefit Violates ERISA
Plaintiff's eleventh claim challenges defendants' application of the
Plan's pre-ERISA break in service rules to exclude his thirteen years of
pre-break credited service in calculating his accrued benefit. Compl.
¶¶ 94-102. With respect to plaintiff's eleventh claim for relief, for
the reasons stated below, plaintiff's motion for summary judgment is
granted and defendants' motion for summary judgment is denied.
Plaintiff contends that once he completed sufficient years of service
to become a vested participant in the Plan, the Board could not disregard
his first ten years of credited service in calculating his accrued
benefit based on his break in service.*fn10
More specifically, the plaintiff contends that ERISA permits a plan to
disregard service pursuant to its pre-ERISA break in service rules only
for vesting purposes, and that once an employee's pension has vested,
such service must be included in calculating the employee's accrued
benefit. Plaintiff's Motion for Partial Summary Judgment ("Pl.'s Mem."),
at pp. 3-14; Plaintiff's Memorandum of Law in Opposition to Defendant's
Motion ("Pl.'s Opp'n Mem."), at pp. 4-8. In other words, plaintiff argues
that all his years of service must be taken into account except those
which can be disregarded under the permitted statutory exclusions for
participation and accrual purposes.
Defendants, in contrast, contend that ERISA permits a plan to disregard
service that would have been discredited under a plan's pre-ERISA break
in service rules for accrual as well as vesting purposes. Defs.' Mem., at
pp. 23-25; Defs.' Opp'n Mem., at pp. 1-3. Specifically, defendants argue
that ERISA § 203(b)(1)(F), 29 U.S.C. § 1053 (b)(1)(F), which
permits a plan to apply its pre-ERISA break in service rules for vesting
purposes, applies when determining the accrued benefit of a vested
employee under ERISA § 204, 29 U.S.C. § 1054.
For the reasons discussed below, we conclude that the language and
structure of ERISA §§ 202-204, 29 U.S.C. § 1052-54, provide ample
support for the plaintiff's position. Moreover, regulations and other
documents from the Internal Revenue Service and the Department of Labor
support the same result. Accordingly, we find that ERISA §
203(b)(1)(F), 29 U.S.C. 1053(b)(1)(F), which permits plans to exclude, for
vesting purposes, years of service that would have been disregarded under
a pre-ERISA plan's break in service rules, is not applicable in
determining the accrued benefit payable to an employee who has satisfied
the vesting requirements. But see, Jones v. UOP, 16 F.3d 141 (7th Cir.
1994) (holding that ERISA § 203(b)(1)(F) is applicable to accrued
benefit calculations under ERISA § 204(b)(1)(D)); Hass and Cass v.
Boeing Co., 1992 WL 221335 (E.D.Pa. 1992) (same), aff'd without op.,
993 F.2d 877 (3rd Cir. 1993)
1. The Language and Structure of Sections 202-204 of ERISA
The Supreme Court has recognized that ERISA is "an intricate,
comprehensive statute." Boggs v. Boggs, 520 U.S. 833, 840 (1997) When
construing ERISA, as with any other statute, our analysis "begins with
`the language of the statute.'" Hughes Aircraft Co. v. Jacobson,
525 U.S. 432, 438 (1999). See also. e.g., Washington v. Schriver,
240 F.3d 101, 108 (2d Cir. 2001) (noting that the first step of statutory
interpretation is to determine whether the language at issue has a "plain
and unambiguous meaning with regard to the particular dispute in the
case" as determined "by reference to the language itself, the specific
context in which that language is used, and the broader context of the
statute as a whole. Where the meaning of a statute is textually
ambiguous, we may consult its legislative history.") (internal quotation
marks and citations omitted)
If Congress has directly addressed "the precise question at issue," the
Court, like administrative agencies, "must give effect
unambiguously expressed intent of Congress." Chevron U.S.A., Inc. v.
Natural Res. Defense Council. Inc., 467 U.S. 837, 842-43 (1984). If
Congress has not addressed the precise question at issue, the question
for the Court is "whether the agency's answer is based on a permissible
construction of the statute." Id. In addressing the second step of the
Chevron inquiry, the Court "need not conclude that the agency
construction was the only one it permissibly could have adopted," id. at
843, and "may not substitute its own construction of a statutory
provision for a reasonable interpretation made by the administrator of an
agency." Id. at 843 n.11.*fn11
We find that, through the language of ERISA §§ 202-204, Congress has
addressed the precise question at issue here and answered it in the
plaintiff's favor. Moreover, even if the precise question at issue here is
not resolved by reference to the Act's text, the agencies charged with
interpreting the Act have given the same answer, which even if not
required by the statutory text, is a reasonable interpretation of the
relevant statutory language.
In passing ERISA, Congress found that "many employees with long years
of employment are losing anticipated retirement benefits owing to the
lack of vesting provisions in such plans." 29 U.S.C. § 1002 (a).
ERISA was designed to reduce, by various means, the number of employees
losing expected pension benefits. See. e.g., Duchow v. New York State
Teamsters Conference Pension & Ret. Fund, 691 F.2d 74, 76 (2d Cir.
1982); Carollo v. Cement & Concrete Workers Dist. Council Pension Plan,
964 F. Supp. 677, 681 (E.D.N Y 1997). See also Smith v. Contini,
205 F.3d 597, 604 (3rd Cir. 2000) ("Congress's chief purpose in enacting
[ERISA] was to ensure that workers received promised pension benefits
upon retirement."). To this end, ERISA provides detailed regulations
concerning employee participation, vesting and accrual governing employee
benefit plans. See ERISA § 202, 29 U.S.C. § 1052 ("Minimum
participation standards"); ERISA § 203, 29 U.S.C. § 1053 ("Minimum
vesting standards"); ERISA § 204, 29 U.S.C. § 1054 ("Benefit
(a) ERISA § 202 — Minimum Participation Standards
ERISA § 202 sets forth the "Minimum participation standards"
governing the limits employers may impose on employee participation in
benefit plans. See 29 U.S.C. § 1052. Specifically, ERISA §
202(a)(1)(A) mandates that "[n]o pension plan may require, as a
condition of participation in the plan, that an employee complete a
period of service" extending beyond the later of the date on which the
employee attains 21 years of age, 29 U.S.C. § 1052 (A)(1)(A)(i), or
completes 1 year of service,*fn12 29 U.S.C. § 1052 (A)(1)(A)(ii).
ERISA § 202(b) further provides:
(1) Except as otherwise provided in paragraphs (2), (3),
and (4) all years of service with the employer or
employers maintaining the plan shall be taken into
account in computing the period of service for purposes
of subsection (a)(1) of this section.
(b) ERISA § 203 — Minimum Vesting Standards
Section 203 sets forth the "minimum vesting standards" for plans
subject to ERISA. 29 U.S.C. § 1053. A defined benefit plan satisfies
the minimum vesting requirements pertaining to employer contributions if
it provides either than an employee who has completed at least 5 years
of service has a nonforfeitable right to 100 percent of the employee's
accrued benefit derived from employer contributions, 29 U.S.C. § 1053
(a)(2)(A), or satisfies the vesting schedule set forth in subparagraph
(a)(2)(B) for employer contributions. Under either method, the minimum
vesting standards are based on the employee's "period of service."
29 U.S.C. § 1053 (a)(2).
Computation of an employee's period of service for vesting purposes is
governed by ERISA § 203(b) which provides, in part:
(1) In computing the period of service under the plan for
purposes of determining the nonforfeitable percentage
under subsection (a)(2) of this section, all of an
employee's years of service with the employer or
employers maintaining the plan shall be ...