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MCDONALD v. PENSION PLAN OF THE NYSA-ILA PENSION TRUST F.

United States District Court, Southern District of New York


March 29, 2001

JAMES MCDONALD, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED PLAINTIFF,
v.
PENSION PLAN OF THE NYSA-ILA PENSION TRUST FUND, AND BOARD OF TRUSTEES OF THE PENSION PLAN OF THE NYSA-ILA PENSION TRUST FUND, IN THEIR OFFICIAL AND PERSONAL CAPACITIES, DEFENDANTS.

The opinion of the court was delivered by: Naomi Reice Buchwald, United States District Judge.

  OPINION AND ORDER

Plaintiff, James McDonald, brings this putative class action against the defendants, the Pension Plan of the New York Shipping Association International Longshoremen's Association Pension Trust Fund ("Pension Plan"), and the Board of Trustees of the Pension Plan ("Board" or "Trustees") alleging multiple violations of the Employee Retirement Income Security Act of 1974, as amended ("ERISA" or the "Act"), 29 U.S.C. § 1001 et seq.*fn1 Currently before the Court are plaintiff's motion for partial summary judgment and defendants' motion for summary judgment. For the reasons set forth in this opinion, plaintiff's motion is granted in part and denied in part, and defendant's motion is granted in part and denied in part.

BACKGROUND

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 following formula:

(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 industry.

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 beneficiaries' pensions 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."), ¶¶ 3-7.

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 claims.

B. The Plaintiff

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.

C. Plaintiff's Claims

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.

DISCUSSION

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 quotation omitted).

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 to the 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 accrual requirements").

(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.

29 U.S.C. § 1052 (b)(1) (emphasis added). Thus, for purposes of an employee's participation in a plan, ERISA requires that "all years of service" be taken into account, with certain enumerated exceptions. Those exceptions, set forth in ERISA § 202(b)(2)-(4), 29 U.S.C. § 1052 (b)(2)-(4), (collectively, "participation exceptions" or "section 202(b) exceptions")
*fn13 do not include an exclusion for service subject to a plan's pre-ERISA break in service provisions, and as noted at the margin, would not exclude plaintiff's pre-break service. See 29 U.S.C. § 1052 (b)(2)-(4)

(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 taken into account, except that the following may be disregarded:

(F) years of service before this part first applies to the plan if such service would have been disregarded under the rules of the plan with regard to breaks in service, as in effect on the applicable date. . . .

29 U.S.C. § 1053 (b)(1)(F).
*fn14 Thus, Congress has explicitly provided that years of service prior to the enactment of ERISA which "would have been disregarded" under a plan's pre-ERISA break in service rules may be disregarded when calculating an employee's period of service for vesting purposes.

(c) ERISA § 204 — Benefit Accrual Requirements

Section 204 of ERISA, 29 U.S.C. § 1054, sets forth ERISA's "benefit accrual requirements" and requires defined benefit plans to satisfy the requirements of subsection (b)(1). See ERISA § 204(a)(1), 29 U.S.C. § 1054 (a)(1). Subsection (b)(1) requires defined benefit plans to satisfy one of three alternative accrual schedules. See ERISA § 204(b)(1)(A) (3% accrual schedule), 29 U.S.C. § 1054 (b)(1)(A); ERISA § 204(b)(1)(B) (133 1/3 percent accrual schedule), 29 U.S.C. § 1054 (b)(1)(B); ERISA § 204(b)(1)(C) (fractional schedule), 29 U.S.C. § 1054 (b)(1)(C).

The parties agree that the only accrual formula relevant to defendants' plan is the 3% accrual schedule, which provides in part:

(1)(A) A defined benefit plan satisfies the requirements of this paragraph if the accrued benefit to which each participant is entitled upon his separation from the service is not less than —

(i) 3 percent of the normal retirement benefit to which he would be entitled at the normal retirement age if he commenced participation at the earliest possible entry age under the plan and served continuously until the earlier of age 65 or the normal retirement age specified under the plan, multiplied by

(ii) the number of years (not in excess of 33 1/3 of his participation in the plan.

29 U.S.C. § 1054 (b)(1)(A). Thus, for years of participation subsequent to the enactment of ERISA, to satisfy the 3% accrual method, a plan must provide that an employee accrue a least 3 percent of his normal retirement benefit multiplied by his years of participation in the plan. See id.

For pre-ERISA service, the Act provides that an employee's years of service prior to its enactment date are to be retroactively credited, but at a reduced rate. See 29 U.S.C. § 1054 (b)(1)(D). Accrual for pre-ERISA years of participation are governed by ERISA § 204(b)(1)(D), which provides:

(D) Subparagraphs (A), (B), and (C) shall not apply with respect to years of participation before the first plan year to which this section applies but a defined benefit plan satisfies the requirements of this subparagraph with respect to such years of participation only if the accrued benefit of any participant with respect to such years of participation is not less than the greater of —

(i) his accrued benefit determined under the plan, as in effect from time to time prior to September 2, 1974, or

(ii) an accrued benefit which is not less than one-half of the accrued benefit to which such participant would have been entitled if subparagraph (A), (B), or (C) applied with respect to such years of participation.

29 U.S.C. § 1054(b)(1)(D). In other words, for years of participation prior to the enactment of ERISA, an employee must receive the greater of either one half the amount he would have received under ERISA § 204(b)(1)(A)-(C) or the full amount he would have received under the terms of the plan.

As discussed above, the 3% accrual formula requires that an employee accrue at least 3% of his normal retirement benefit for each year of participation to which ERISA § 204(b)(1)(A) applies. See 29 U.S.C. § 1054(b)(1)(A). Thus, an employer who elects to meet the 3% method for calculating the employee's accrued benefit for pre-ERISA service must provide the employee with the greater of either his accrued benefit under the terms of the plan, 29 U.S.C. § 1054 (b)(1)(D)(i), or one half the amount he would have received under ERISA § 204(b)(1)(A) based on that section's formula of 3 percent multiplied by the employee's number of years of participation. See ERISA § 204(b)(1)(A), 29 U.S.C. § 1054 (b)(1)(A); ERISA § 204(b)(1)(D)(i), 29 U.S.C. § 1054 (b)(1)(D)(i).*fn15

For accrual purposes, a "year of participation," is in turn defined by ERISA § 204(b)(4)(A):

(4)(A) For purposes of determining an employee's accrued benefit, the term "year of participation" means a period of service (beginning at the earliest date on which the employee is a participant in the plan and which is included in a period of service required to be taken into account under section 1052(b) of this title, determined without regard to section 1052(b)(5) of this title) as determined under regulations prescribed by the Secretary which provide for the calculation of such period on any reasonable and consistent basis.

29 U.S.C. § 1054(b)(4)(A). Thus, in determining the number of years of participation for purposes of calculating an employee's accrued benefit under the 3% accrual schedule, ERISA § 204(b)(1)(A) explicitly requires a plan to count all of an employee's years of participation "beginning at the earliest date on which the employee is a participant" and which is "included in a period of service required to be taken into account under (ERISA's participation provisions]," discussed above.

As noted previously, ERISA's participation provisions require that "all service with the employer or employers maintaining the plan shall be taken into account in computing the period of service" subject only to the participation exclusions contained in ERISA § 202(b)(2)-(4). 29 U.S.C. 1052(b)(1) (emphasis supplied). Those exclusions do not contain the vesting exclusions set forth in ERISA § 203(b)(1) (such as the exclusion of service that would be disregarded under the terms of the pre-ERISA plan's break in service rules under § 203(b)(1)(F)).

(d) Discussion

While ERISA's participation, vesting and accrual provisions are complicated and densely worded, we think their requirements are clear. ERISA §. 204(b)(1)(D) provides for accrual for pre-ERISA service in accordance with an employee's "years of participation" rather than an employee's "period of service" or "years of service." 29 U.S.C. § 1054 (b)(1)(D). See also, 29 U.S.C. § 1054 (b)(1)(A) (calculating 3% benefit based on years of participation). Moreover, ERISA § 204(b)(4)(A) explicitly defines the term "year of participation" as beginning on "the earliest date" on which an employee is a participant and which is included in the period of service "required to be taken into account under section 1052(b) of this title [i.e. ERISA § 202(b)]." 29 U.S.C. § 1054 (b)(4)(A). Thus, Congress has explicitly provided that, for accrual purposes, an employer is to include all of an employee's years of participation "beginning at the earliest date on which the employee is a participant" and which is included in a period of service required to be taken into account under ERISA § 202(b). See 29 U.S.C. § 1054 (b)(4)(A); 29 U.S.C. § 1052 (b).

In other words, an employee's accrued benefit is calculated using all years in which he was a participant under the participation provisions of ERISA § 202(b), not the vesting provisions of ERISA § 203(b). Thus, in calculating a vested employee's accrued benefit, employers may not disregard service except as provided by ERISA § 202(b), and may not exclude years of service based on a plan's pre-ERISA break in service rules. Where the language of a statute is clear, we presume Congress intended the result of the language it employed.

Had Congress meant to permit the exclusion of an employee's years of service under a plan's pre-ERISA rules for accrual purposes, it would not have used the words "years of participation" in the accrual section. Moreover, Congress clearly could have employed the language to permit the exclusion of service under a plan's pre-ERISA rules for accrual purposes, as it did in the section governing vesting. Instead, the enumerated participation and vesting exclusions are different. ERISA § 202(b) does not exclude years of service that would "have been disregarded under the rules of the plan with regard to breaks in service" as in effect prior to the enactment of ERISA. Compare ERISA § 203(b)(1)(F) 29 U.S.C. § 1053(b)(1)(F) (providing for such an exclusion for vesting purposes). At a minimum, Congress could have cross-referenced the definition of "year of participation" for accrual purposes to ERISA § 203(b) (which, as noted, permits such an exclusion for vesting) rather than to ERISA § 202(b) (which does not).*fn16 Congress did not do so, however.

2. Agency Regulations and Opinion Letters

Regulations issued by the Internal Revenue Service and the Department of Labor,*fn17 as well as letters and other documents from the Internal Revenue Service support the conclusion that employers may not apply pre-ERISA break-in-service rules in calculating benefit accrual. We turn first to the agencies' regulations.

(a) Labor Department Regulations

The Secretary of Labor has issued rules and regulations for minimum standards for pension plans concerning an employee's participation, vesting and accrual under ERISA. See 29 C.F.R. § 2530.202-2530.204. Under these regulations, the rules governing years of participation and breaks in service for vesting purposes are distinct from the rules for accrual purposes. See 29 C.F.R. § 2530. 200b-4.*fn18

29 C.F.R. § 2530.204-1, entitled "Year of participation for benefit accrual," governs the years of participation that must be taken into account for purposes of benefit accrual under a defined benefit plan. 29 C.F.R. § 2530.204-1(a). The regulation specifies which service "may be disregarded for purposes of benefit accrual" 29 C.F.R. § 2530.204-1(b).*fn19 As discussed at the margin, the exclusion contained in ERISA § 203(b)(1)(F) permitting plans to disregard for vesting purposes service which would have been disregarded under a pre-ERISA plan's break in service rules, is not incorporated into the service which may be disregarded for accrual purposes.

Defendant cites 29 C.F.R. § 2530.204-2 (b) for the proposition that years of participation may be disregarded for accrual purposes based on a plan's pre-ERISA break in service rules.*fn20 Defs.' Mem., p. 23. However, section 2530.204-2(b) explicitly provides that "all service from the date of participation in the plan, as determined in accordance with applicable plan provisions, shall be taken into account" in determining an employee's period of service for benefit accrual purposes. 29 C.F.R. § 2530.204-2(b) (emphasis added). Thus, as in the Act's text, the Labor Department regulations require all service from an employee's date of participation in the plan is to be taken into account in determining an employee's accrued benefit. This is a reasonable interpretation of the relevant statutory language, and is entitled to deference. See e.g., Chevron, 467 U.S. 843-45.

While plaintiff argues that the clause "as determined in accordance with the applicable plan provisions" incorporates a plan's pre-ERISA break in service rules, we believe that what is to be determined in "accordance with applicable plan provisions" is clearly the employee's "date of participation." The remainder of the paragraph, which sets forth a presumption for determining an employee's "date of commencement of participation," leads us to conclude that no incorporation of a plan's pre-ERISA break rules was intended.*fn21 Thus, a vested employee's accrued benefit is to be determined in accordance with the participation provisions set forth in ERISA § 202(b) (eligibility to participate) rather than the vesting provisions of ERISA § 203(b)(1).*fn22

(b) Treasury Department Regulations

Like the Secretary of Labor's regulations, the regulations issued by the Secretary of the Treasury ("Treasury regulations" or "IRS regulations") also support the conclusion that a vested employee's pre-ERISA years of participation may not be disregarded for accrual purposes under the exclusion provided in ERISA § 203(b)(1)(F) for vesting purposes.

First, the IRS Regulations incorporate the "rules relating to years of service" issued by the Secretary of Labor, and thus adopt the interpretations of the Department of Labor. 26 C.F.R. § 1.410(a)-5(a) (years of service and breaks in service for purposes of eligibility to participate); 26 C.F.R. § 1.411(a)-1(a)(E) (years of service and breaks in service for vesting purposes). See also 26 C.F.R. § 1.411 (b)-1(c) ("Accruals for service before effective date" of ERISA) (referencing 29 C.F.R. § 2530, "for time participation deemed to begin").

Second, while the IRS Regulations relating to vesting contain an exclusion for service which would have been disregarded under a plan's pre-ERISA break in service rules, see 26 C.F.R. § 1.411 (a)-5, the regulations governing years of service and breaks in service for participation purposes, 26 C.F.R. § 1.410 (a)-5, do not. See 26 C.F.R. § 1.410(a)-5(c). The portion of the IRS Regulations concerning "accruals for service before the effective date" provide for the calculation of an employee's service based on his participation and do not appear to exclude any years of participation based a plan's pre-ERISA break in service rules. See 26 C.F.R. § 1.411 (b)-1(c)(1). *fn23 See also 26 C.F.R. § 1.411(b)-1(f) (defining a "year of participation" for "purposes of determining an employee's accrued benefit" by reference to the regulations prescribed by 29 C.F.R. § 2530). The IRS's regulations, like those of the Department of Labor, are reasonable interpretations of the relevant statutory language, and are entitled to deference. See, e.g., Chevron, 467 U.S. at 843-45.

Finally, the IRS's letters*fn24 interpreting its own regulations, discussed below, support the same conclusion.

(c) IRS's Interpretation of its Regulations

An agency's reasonable, consistently held interpretation of its own regulation is entitled to deference. See, e.g., Edsen v. Bank of Boston, 229 F.3d 154, 168 (2d Cir. 2000) (citation omitted) Provided an agency's interpretation does not violate the Constitution*fn25 or a federal law, is not plainly erroneous or inconsistent with the regulation, it must be given controlling weight. See id. (citations omitted).

The IRS's February 14 letter "conveys the views of the Office of Chief Counsel [of the IRS], which is vested with interpretive authority over the regulations" at issue here. IRS Opinion Letter, p. 1. As such, it is entitled to deference. See, e.g., Chevron 467 U.S. at 844. At a minimum, it is "entitled to respect." See, e.g., Edsen, 229 F.3d at 169 n.19 (deferring to IRS Notice, and noting that IRS's "`rulings, interpretations and opinions' remain a `body of experience and informed judgment to which courts and litigants may properly resort to for guidance,' even when they do not authoritatively control courts.") (citations omitted).

The IRS's February 14 letter interpreting the relevant provisions of the Act provides that "unless an employee's pre-ERISA years of service can be disregarded under the specific break-inservice rules set forth in [ERISA § 202(b)(1)-(4)], such pre-ERISA service must be taken into account for the purpose of determining that employee's accrued benefit under the benefits plan in question." IRS Opinion Letter, p.2 (emphasis added).*fn26 This is a reasonable interpretation of the statutory language and the regulations issued by both the Departments of Labor and the Treasury, and is not clearly erroneous. Thus, in calculating an employee's accrued benefit, an employer must include all of the employee's years of service, except those which may be excluded for participation under ERISA § 202(b)(1)-(4).

3. Contrary Decisions and the Legislative History

Although the language of the Act itself, the relevant agency regulations, and the IRS's interpretations of those regulations all support plaintiff's position, the defendants nevertheless urge the Court to follow two decisions which have held that ERISA § 203(b)(1)(F) is applicable to accrued benefit calculations under ERISA § 204(b)(1) (D),*fn27 Jones v. UOP, 16 F.3d 141 (7th Cir. 1994); Hass and Cass v. Boeing Co., 1992 WL 221335 CE.D.Pa. 1992), aff'd without op., 993 F.2d 877 (3rd Cir. 1993). We decline to do so.

We note that in Jones, the employee in question had received credit for his pre-break service under another pension plan, yet sought to receive "in effect, double credits" for the same years under the plan at issue there. 16 F.3d at 144. While we agree with the Jones Court that ERISA § 204 is intended to prevent backloading in contravention of ERISA § 203's vesting requirements,*fn28 see id, we believe that the plain language of ERISA § 204(b)(1)(D), which requires certain benefit accrual for pre-ERISA "years of participation," and ERISA § 204(b)(4)(A) (which explicitly defines the term "year of participation" in reference to ERISA's participation requirements), precludes a plan from excluding years of service based on its pre-ERISA break in service rules when calculating an employees accrued benefit.

In contrast, the Hass Court based its decision on an excerpt from the legislative history.*fn29 See 1992 WL 221335, at *4. First, in light of the language of the Act, the implementing regulations and the authoritative interpretation of the IRS, we do not believe it is necessary to delve into the legislative history. Second, when read in its entirety,*fn30 we do not believe this passage evinces a clear legislative intent to either permit or prohibit the application of break-in-service provisions under these circumstances.*fn31 The relevant passage of the legislative history summarizes four general rules "with respect to break in service for vesting and benefit accrual purposes." The first two (concerning one-year breaks-in-service and individual account plans) are inapplicable here. The third rule, which provides that "[s]ubject to rules (1) and (2), once an employee has achieved any percentage of vesting, then all of his pre-break and post-break service must be aggregated for all purposes," appears to support plaintiff's position. Likewise, the fourth rule, which provides that nonvested employees will "not lose credits for pre-break service until his period of absence equaled his' years of covered service" (the rule of parity), supports the plaintiff's position.

Following these rules, is a passage which provides "[f]or years beginning prior to the effective date of the vesting provisions, a plan may apply the break-in-service rules provided under the plan, as in effect from time to time," and appears to support defendants' position. The passage, however, is silent on the critical question of whether this exclusion applies to the accrual provisions as well as the referenced vesting provisions.*fn32 While defendants urge us to answer the question in the affirmative, effectively importing the introductory "for vesting and benefit accrual purposes" language that proceeds the four general rules to the sentence that follows them, we decline to do so.

While defendant's reading of the legislative history is a plausible one, we refuse to read this isolated passage as sufficient to demonstrate a clear Congressional intent to extend the exclusion in the vesting section to the calculation of an employee's accrued benefit in the face of the more precise language found in the relevant provisions of the Act, the regulations issued by the agencies and the interpretation issued by the IRS. Thus, we conclude that through the language of the Act, Congress has resolved the precise question at issue here in the plaintiffs favor, and alternatively, that if the Act is silent or ambiguous on this point, that the agencies' interpretations of the relevant language are reasonable and entitled to deference.

B. Plaintiff's Claims for "Sabbatical Years" and for SRP Benefits

Plaintiff's fifteenth and sixteenth claims for relief seek credit for two "sabbatical years" under the Plan and for SRP benefits based on 25 years of credited service. Compl. ¶¶ 122-128. Under the Plan, "sabbatical years" are available to employees with twenty-three years of credited service who need two additional years of credited service to receive SRP benefits. See, e.g., 1995 Plan, A378. Employees receiving credit for sabbatical years can receive up to two years of credited service towards the 25 year requirement for SRP benefits. See, id. Defendants contend that plaintiff is ineligible for sabbatical year credit and for SRP benefits because his 1970-1972 break in service leaves him with only 10 years of credited service under the plan. Defs.' Mem., pp. 32-33.

As we have held that defendants may not apply the Plan's pre-ERISA break in service rules to disregard plaintiff's first thirteen years of service, plaintiff appears to have twenty-three years of service, making him potentially eligible for sabbatical credit. Accordingly, defendants' request for summary judgment on plaintiff's fifteenth and sixteenth claims is denied, and the defendants are instructed to determine consistent with this opinion whether plaintiff is entitled to the sabbatical year credit and SRP benefits sought.

C. Calculation of Plaintiff's VRP Benefit

Defendants' motion for summary judgment on plaintiff's seventeenth claim for relief, which alleges that defendants miscalculated his monthly VRP benefit, Compl. ¶¶ 129-133, is denied. Defendants calculate that plaintiff is entitled to $263.38 per month, while plaintiff calculates his VRP benefit as $289.68 per month. The difference between the two figures stems from whether plaintiff's salary is computed using the $950 maximum pension in effect through September 30, 1986, or the $1,045 maximum pension in effect from October 1, 1986 to September 30, 1992. Defs.' 56.1 Statement, ¶ 10. While the last year in which plaintiff is entitled to a year of credited service is clearly 1986, Defs.' 56.1 Statement, ¶ 20; A1 (chart reading "1986P 912.0 [hours]"), it is not entirely clear from the record whether the 1986 Plan year is the year ending on September 30, 1986 or the year beginning on October 1, 1986. Moreover, in light of our decision on the break in service issue, plaintiff is entitled to a recalculation of his accrued benefit to include all his years of credited service under either the SRP or VRP. Accordingly, defendants' motion for summary judgment is denied.

D. Statutory Penalties Under ERISA

Plaintiff's eighteenth claim for relief seeks the imposition of statutory penalties pursuant to ERISA § 502(c)(1), 29 U.S.C. § 1132 (c)(1), for defendants' alleged failure to furnish certain documents, pursuant to ERISA § 104(b)(4), 29 U.S.C. § 1024 (b)(4) in response to his counsel's 1998 request.*fn33 For the reasons that follow, defendant's motion for summary judgment is granted in part and denied in part.

Plaintiff alleges that he was not provided with (1) an updated SPD and (2) any IRS determination letters (including applications for them). Compl. ¶¶ 135-40. Defendants provided the 1992 SPD, but did not provide IRS determination letters. A153-157. ERISA § 104(b)(4) requires a plan administrator to provide, upon request, "the latest updated [SPD]" and "other instruments under which the plan is established or operated." 29 U.S.C. § 1024 (b)(4). The Second Circuit has held that "other instruments" was not meant to include "all of the plan's papers, documents, recorded information, or reports," Board of Trustees of the CWA/ITU Negotiated Pension Plan v. Weinstein, 107 F.3d 139, 143 (2d Cir. 1997), but encompasses "formal or legal documents under which a plan is set up or managed." Id. at 142-43. IRS determination letters are not formal documents under which a plan is set up or managed. See Faircloth v. Lundy Packing Co., 91 F.3d 648, 654 (4th Cir. 1996). Accordingly, they are not "other instruments under which a plan is established or operated," nor are applications for them such instruments, and defendants were not required to produce them.

The same cannot be said for defendants' failure to provide an updated SPD. While it is undisputed that the defendants promptly provided a copy of the 1992 SPD in response to plaintiff's 1998 request it is also undisputed that defendants failed to prepare an SPD that reflected amendments made within the proceeding 5 years as required by ERISA § 104(b)(1).*fn34 Defs.' October 16, 1998 letter, A156-157. Defendants' failure to prepare a document required by ERISA cannot be a defense to a beneficiary's request for penalties for the failure to provide a copy of that document. See Kascewcz v. Citibank, N.A., 837 F. Supp. 1312, 1323 (S.D.N.Y. 1993).

The imposition of penalties for failure to supply requested information under ERISA § 502(c)(1) is at the discretion of the trial court. In deciding whether to award penalties for defendants' failure to provide an updated SPD, courts consider the following factors:

(1) the administrator's bad faith or intentional conduct; (2) the length of the delay; (3) the number of requests made; (4) the extent and importance of the documents withheld; and (5) the existence of any prejudice to the participant or beneficiary.

Austin v. Ford, 1998 WL 88744, at *6 (S.D.N.Y. 1998). See also Pagovich v. Mosckowitz, 865 F. Supp. 130, 137 (S.D.N.Y. 1994) (same)

Defendants assert that plaintiff made only one request for documents, that defendants promptly explained which documents they would provide, that there is no showing of prejudice or injury to the plaintiff, and that under the factors above, the Court should decline to impose penalties, Defs.' Mem. at 35-36. While prejudice is "a significant factor," in the decision to award penalties, it is not a prerequisite. Kascewicz, 837 F. Supp. at 1322. Thus, we cannot conclude with certainty on the basis of the present papers that plaintiff will be unable to demonstrate that he is entitled to some penalty. Compare Austin, 1998 WL 88744, at *6-7 (awarding penalties at $10 per day despite the fact that plaintiff did not claim prejudice) with Lacoparra v. Pergament Home Centers. Inc., 982 F. Supp. 213, 230 (S.D.N.Y. 1997) (declining to award penalties where both prejudice and bad faith were absent) and Grochowski v. U.E. Systems. Inc., 917 F. Supp. 258, 261 (S.D.N.Y. 1996) (same).

Accordingly, defendants' motion for summary judgment is denied with respect to the failure to produce an updated SPD and granted with respect to the IRS determination letters (and requests for such letters).

E. plaintiff's Claim Concerning Copying Fees is Dismissed

Defendants' motion for summary judgment against plaintiff's nineteenth claim for relief, which alleges that defendants failed to assess a "reasonable charge" for copies of documents provided to him pursuant, to ERISA § 104(b)(4), 29 U.S.C. § 1024 (b)(4), is granted. The Department of Labor has issued a regulation proscribing a maximum reasonable charge, which provides in pertinent part:

Reasonableness. The charge assessed by the plan administrator to cover the costs of furnishing documents is reasonable if it is equal to the actual cost per page to the plan for the least expensive means of acceptable reproduction, but in no even may such charge exceed 25 cents per page.

29 C.F.R. § 2520.104(b)-30. plaintiff asserts that defendants charge of 15 cents per page was not reasonable in light of the availability of commercial reproduction services that charge less per page. Pl.'s Opp'n Mem., pp.15-16.

First, the Court notes that the total amount charged to the plaintiff for copying was $30.45 (203 pages at 15 cents per page). To pursue a claim for this amount,*fn35 under the circumstances of this case, borders on the frivolous. Second, while the use of the words "actual cost" and "least expensive means of acceptable reproduction" in the Department of Labor's regulation precludes this Court from imposing sanctions pursuant to Fed. R. Civ. P. 11, we note that the conduct of plaintiff's counsel in pursuing this claim is vexatious and unprofessional. At a minimum, counsel for the plaintiff has allocated time and available briefing pages to pursuing this claim where his client's interests would have been better served had counsel's efforts been directed to the merits of plaintiff's other claims. Moreover, plaintiff's pursuit of this claim has doubtless imposed costs on the Pension Plan far in excess of the amount at issue.

Finally, ERISA § 104(b)(4) entitles plaintiff to copies of certain plan documents at a "reasonable charge," not at the lowest rate commercially available. 29 U.S.C. 1024(b)(4). We do not read the relevant regulation to require pension plans to conduct a cost/benefit analysis to determine if the per page savings from outplacing their copying exceeds the additional labor costs of sending an employee to do so. Where documents are copied "in house" rather than at a commercial copying service, a charge of 15 cents per page as an estimate of the "actual cost" of those copies is reasonable where, as here, plaintiff has offered no evidence to suggest that defendants' actual costs were higher.

F. Statute of Limitations

For the reasons that follow, defendants motion for summary judgment on statute of limitations grounds is granted in part and denied in part.

1. Plaintiff's Breach of Fiduciary Duty Claim

For claims of breach of fiduciary duty, ERISA § 413(a) provides for a statute of limitations period equal to the lesser of (1) six years after the date of the last action constituting a breach; or (2) three years after the earliest date on which the plaintiff had actual knowledge of the breach or violation.*fn36 As discussed below, plaintiff brings a fiduciary duty claim based on defendants' December 4, 1995 letter, A113-16, and defendants' March 30, 2000 letter, Bates No. 000026. Compl. ¶¶ 73-74; Pauk Aff. in Opp'n, ¶¶ 17-18, 23-24. While we are not certain of the exact date on which it was received, there can be no dispute that plaintiff (and his counsel) had actual knowledge of the December 4, 1995 letter, which contains the statements plaintiff's counsel alleges amount to breaches of fiduciary duty, more than 3 years before this action was commenced on August 20, 1999. Thus, to the extent that plaintiff's sixth claim for breach of fiduciary duty is based upon the defendants' December 4, 1995 letter, it is barred by the statute of limitations.

2. Plaintiff's Other Claims

For claims other than breach of fiduciary duty, ERISA does not provide a statute of limitations period. Accordingly, the controlling statute of limitations period is that specified in the most nearly analogous state limitations statue. See, e.g., Miles v. New York State Teamsters Conference Pension & Ret. Fund Employee Pension Benefit Plan, 698 F.2d 593, 598 (2d Cir. 1983). For plaintiff's benefit claims, the six year period for contract actions prescribed by New York's C.P.L.R. § 213 controls. See id.

We now turn to effect of the statute of limitations on plaintiff's claims for benefits under ERISA. A cause of action under ERISA accrues upon a "clear repudiation" by a plan that is known, or should be known to the plaintiff, regardless of whether the plaintiff formally applied for benefits. Carey v. International Bhd. of Elec. Workers Local 363 Pension Plan, 201 F.3d 44, 49 (2d Cir. 1999)

Defendants assert that the Plan's November 20, 1991 letter, A51, was such a "clear repudiation." Defs.' Mem. at 39. While the Plan's November 20, 1991 letter does deny plaintiff a "window period pension" based on a determination that he has only ten years of credited service, in light of the subsequent history of correspondence between the defendants and plaintiff's counsel concerning plaintiff's benefits,*fn37 we cannot conclude, as a matter of law, that plaintiff knew or should have known that the November 20, 1991 letter was a "clear repudiation." Accordingly, except as granted with respect to plaintiff's breach of fiduciary duty claim, defendants' motion for summary judgment on statute of limitations grounds is denied.

III. Plaintiff's Class Claims

A. Plan's Pre-ERISA Accrual Schedule Complies With ERISA

The parties have filed cross-motions for summary judgment on plaintiff's first cause of action, which alleges that the Plan's benefit structure violates ERISA § 204(b)(D) because it does not provide the same pre-ERISA benefit accrual rate for all participants. Compl. ¶¶ 19-27. For the reasons that follow, plaintiff's motion for summary judgment is denied and defendants' motion for summary judgement is granted.

As previously noted, ERISA's benefit accrual provisions require benefit plans to satisfy one of three benefit formulas. See 29 U.S.C. § 1054(b)(1)(A)-(C). See also, e.g., Lageoles v. Ret. Fund of the Fur Mfg. Indus., 1985 WL 1815, at *20 (S.D.N Y 1985). With respect to pre-ERISA service, plan beneficiaries must receive an accrued benefit that is not less than the greater of (i) his accrued benefit under the terms of the plan, or (ii) one-half the accrued benefit he would have received under one of ERISA's three benefit formulas. 29 U.S.C. § 1054 (b)(1)(D). See, e.g., Legeoles, 1985 WL 1815, at *20. See also Carollo v. Cement & Concrete Workers Dist. Council Pension Plan, 964 F. Supp. 677, 684 (E.D.N.Y. 1997) (the pre-ERISA accrual requirements of ERISA § 204(b)(1)(D) are satisfied by providing one-half of the post-ERISA accrual under any one of the Act's accrual formulas).

As the terms of the Plan did not provide for any accrued benefit prior to ERISA, a Plan beneficiary is entitled to receive one-half of the accrued benefit he would have received under one of ERISA's three benefit formulas. See 29 U.S.C. § 1054 (b)(1)(D)(ii). The only benefit formula the Plan is alleged to have satisfied is the 3% accrual formula. Thus, plan beneficiaries must accrue one-half of 3% of the normal retirement benefit, or simply, 1.5% of the normal retirement benefit, for each pre-ERISA year of service. There is no dispute that the Plan at issue here provides for at least this accrual.*fn38

Plaintiff's argument that the plan violates ERISA § 204(b)(1)(D) because it does not provide the same pre-ERISA accrual for all beneficiaries is foreclosed by Judge Sand's decision in Lageoles, 1985 WL 1815, at *21-23. ERISA § 204(b)(1)(D) does not require the same pre-ERISA accrual rate for all beneficiaries; it "merely sets a lower limit on the level of benefits which may be awarded to plan participants." Id. *21. As there is no dispute that the Plan provides an accrual of at least 1.5% of the normal retirement benefit to all beneficiaries for each year of pre-ERISA service, it satisfies the requirements of ERISA § 204(b)(1)(D).*fn39 Accordingly, plaintiff's motion for summary judgment on his first claim of relief is denied and defendants' motion for summary judgment on plaintiff's first claim for relief is granted.

B. Plan's Post-ERISA Accrual Schedule Comolies with ERISA

The parties have also cross-moved for summary judgment on plaintiff's second cause of action, which alleges that the Plan's post-ERISA accrual schedule violates ERISA. Compl. ¶¶ 29-50. Specifically, the plaintiff alleges that the Plan's post-ERISA accrual schedule fails to satisfy ERISA's 3% accrual schedule because the maximum benefit accrues over 40 years of service rather than over 33 and 1/3 years of service. Compl. ¶¶ 35, 43, 48.*fn40 For the reasons that follow, plaintiff's motion for summary judgment is denied and defendants' motion for summary judgment is granted.

As plaintiff concedes,*fn41 the 1995 Plan, as amended, provides that all beneficiaries retiring on or after January 1, 1976 receive the greater of the benefits provided under the SRP or the VRP. 1995 Plan Amendment, A121-23. Moreover, it is clear that the Plan's VRP benefit formula provides for an accrued benefit that satisfies ERISA's 3% benefit accrual test. See 29 U.S.C. § 1054 (b)(1)(A). Accordingly, all employees who receive benefits under the 1995 Plan, as amended, have received sums which reflect at least the minimum accrual required by ERISA.

For post-ERISA service, the Plan's VRP provides for an accrued benefit of 3% per month per year of the Plan's maximum monthly benefit in effect at the time the employee ceases employment in the industry. 1995 Plan Amendment, A122. For employees whose service begins after January 1, 1976, this necessarily results in the accrual of 100% of the maximum monthly benefit in 33 and 1/3 years.

For employees with both pre- and post-ERISA service, the Plan's VRP benefit formula provides (a) an accrued benefit of 1.5% per month per year of the maximum monthly benefit in effect at the time the employee ceases employment in the industry for each year of pre-ERISA service. Id. In addition, the Plan provides (b) an accrued benefit of 3% per month per year of the maximum monthly benefit in effect at the time the employee ceases employment in the industry for each year of post-ERISA service plus 3% per month per year of the amount provided by (a) above. Id.

While employees who have accrued benefits for years of Pre-ERISA service at a reduced rate may require more than 33 and 1/3 years of combined pre- and post-ERISA service to accrue the maximum monthly benefit, this is the inevitable result of Congress's decision to permit pension plans to provide reduced accruals for pre-ERISA years of service. Accordingly, the Plan's VRP benefit accrual formula satisfies ERISA's accrual requirements and is not impermissibly back-loaded.*fn42 See 29 U.S.C. § 1054 (b)(1)(A) (3% accrual); 29 U.S.C. § 1054 (b)(1)(D)(ii) (one half the accrual provided for by any of ERISA's alternative formulas for pre-ERISA service); 26 C.F.R. § 1.411 (b)-1(c)(2)(v) (difference between an employee's accrued benefit for pre-ERISA years and his normal 3% benefit must be accrued in the post-ERISA years at the rate of 3% per year).

C. Defendants Have Made All Retroactive Adjustments Under the 1995 Plan Amendment

Plaintiff's sixth claim for relief, Compl. ¶¶ 61-71, alleges that defendants have "unreasonably failed to reveal whether they paid retroactive adjustments to all participants entitled to them" and that as a result, "it must be presumed that they did not make those payments, thereby violating the terms of the Plan, as amended." Compl. ¶ 71. For the reasons that follow, defendants' motion for summary judgment on plaintiff's sixth claim for relief is granted.

There is no dispute that the Plan has paid retroactive benefits to 110 of 114 beneficiaries who were entitled to a retroactive adjustment of their pension amounts under the 1995 Plan Amendment. Lee Aff., ¶¶ 4-7. While plaintiff's counsel argues defendants must pay retroactive adjustments beyond those to the 114 beneficiaries already identified in order to include beneficiaries who retired before October 1, 1992, Pl.'s Mem., pp. 22-23; Pl.'s Mem. in Opp'n, pp. 18-19, it is undisputed that no pensioner who retired prior to 1992 has sufficient years of post-ERISA service to receive an increase in benefits under the 1995 Amendment. Lee Aff., ¶ 4.

Thus, except for four beneficiaries who have not received adjustments because they are deceased with no next of kin, Lee Aff. ¶ 5, n.1, and those retiring on or after October 1, 1996, whose benefits are governed by more recent Plan benefit accrual formulas, Lee Aff. ¶ 6, the Plan has paid all retirees benefits in accordance with the 1995 Plan, as amended. Lee Aff. ¶¶ 4-7. Moreover, there is no question that a proposed class of four claimants is not sufficiently numerous to render the joinder of all members impracticable as required by Fed. R. Civ. P. 23(a)(1). Accordingly, defendants' motion for summary judgment on plaintiff's sixth claim for relief is granted.

D. Defendants' Alleged Breach of Fiduciary Duty

Plaintiff's seventh claim for relief alleges that defendants committed a breach of fiduciary duty by lying when they wrote to his attorney that the Plan had always complied with the 3% schedule and that plaintiff's argument to the contrary had no merit. Compl. ¶¶ 73-74. For the reasons that follow, defendants' motion for summary judgment on plaintiff's seventh claim for relief is granted.

Specifically, plaintiff's counsel argues that the defendants' December 4, 1995 letter to him, A113-16, which stated that the Trustees had decided to amend the Plan to clarify the amount of monthly benefits to be provided to certain beneficiaries and which concluded that there was no factual or legal merit to the arguments raised in plaintiff's appeal, along with defendants' March 30, 2000 letter, Bates No. 000026, notifying beneficiaries receiving a retroactive adjustment that they were entitled to an increased pension amount, give rise to a claim under Varity v. Howe, 516 U.S. 489 (1996). Compl. ¶¶ 73-74; Pauk Aff. in Opp'n, ¶¶ 17-18, 23-24.

ERISA requires a fiduciary to "discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries." Varity v. Howe, 516 U.S. at 506 (citing ERISA § 404(a)). In assessing the requirements of fiduciaries under ERISA, our analysis is informed by the common law of trusts. See id., 516 U.S. at 497. Falsehoods are inconsistent with the duty of loyalty owed by all fiduciaries and codified in ERISA § 404(a)(1). See id., at 506.

To establish a breach of fiduciary duty based on an alleged misrepresentation, the plaintiff must show: (1) that the defendants were acting in their fiduciary capacities when they made the alleged misrepresentations; (2) that the defendants made a material misrepresentation; and (3) that the plaintiff relied on that misrepresentation to his detriment. Cerasoli v. Xomed, Inc., 47 F. Supp.2d 401, 405 (W.D.N.Y. 1999) (citing Varity v. Howe, 516 U.S. 489 (1996) and Ballone v. Eastman Kodak Co., 109 F.3d 117, 122, 126 (2d Cir. 1997)). See also, Becker v. Eastman Kodak Co., 120 F.3d 5, 8 (2d Cir. 1997) ("a plan breaches its fiduciary duty by making affirmative material misrepresentations . . . about changes to an employee pension benefits plan"); Mullins v. Pfizer, Inc., 23 F.3d 663, 669 (2d Cir. 1994) ("a plan administrator may not make affirmative misrepresentations to plan participants about changes to an employee pension benefits plan"). A misrepresentation is "material" if it would induce a reasonable person to rely upon it. See Ballone, 109 F.3d at 122-23; Mullins, 23 F.3d at 669.

Here, the defendants were acting in their fiduciary capacities, satisfying the first element. Turning first to defendants' December 4, 1995 letter, A113-16, the defendants' statement of their position therein that plaintiff was not entitled to increased benefits is not a misrepresentation. While defendants' denial of plaintiff's claim for increased benefits has not been validated by this litigation in all respects, not every denial of benefits amounts to a breach of fiduciary duty. Similarly, defendants' statements in the December 4 letter concerning the Plan are not misrepresentations. While plaintiff's counsel appears to object to the defendants' failure to declare plaintiff the catalyst for the 1995 Plan Amendment, Pauk Aff. in Opp'n, ¶ 17-24, defendants' expression of its position that the Plan did not violate ERISA was not a misrepresentation.

Moreover, even assuming that both sets of statements in the December 4 letter were false, plaintiff has not alleged that he relied upon them to his detriment or that he has suffered any prejudice as a result. The defendants' December 4, 1995 letter was sent to plaintiff's counsel nearly 10 years after plaintiff last completed a year of credited service under the Plan and four years after plaintiff last completed any hours of service under the plan.*fn43 Even assuming that plaintiff's claim for breach of fiduciary duty based on this letter were not barred by the statute of limitations, plaintiff could not have reasonably relied the December 4, 1995 letter to his detriment.*fn44 See Kurz v. Philadelphia Elec. Co., 994 F.2d 136, 140 (3rd Cir. 1993) ("The ultimate inquiry is whether there is a substantial likelihood that the affirmative misrepresentation would mislead a reasonable employee in making an adequately informed decision about if and when to retire.") (internal quotations and citations omitted). Similarly, as the December 4 letter was sent only to plaintiff, other putative class members could not have reasonably relied upon it to their detriment.

Turning next to defendants' March 30, 2000 letter, we note that according to its terms, the letter was sent to retired Plan beneficiaries, informing them of a retroactive increase of their pension benefits. The statements therein that the defendants had determined that the recipients were entitled to increased pensions were not misrepresentations. Indeed, they accurately informed the recipients that they could expect a retroactive increase in benefits. While plaintiff's counsel object that defendants' took credit for the increase, Pauk Aff. in Opp'n, ¶ 24, that does not amount to a misrepresentation, let alone a material one. Even assuming arguendo that the March 30, 2000 letter contained a misrepresentation about the genesis of the retroactive increase, the retired beneficiaries receiving it could not have reasonably relied upon it to their detriment. Accordingly, defendants' motion for summary judgment as to plaintiff's seventh claim for relief is granted.

E. Plaintiff's Claim for Interest on Late Payments

Plaintiff's eighth claim for relief seeks an award of interest on the retroactive pension adjustments paid by the defendants. Compl. ¶¶ 76-78. For the reasons that follow, defendants' motion for summary judgment on plaintiff's eighth claim is granted in part and denied in part.

There is no question that plaintiff may pursue an award of prejudgment interest on unpaid benefits where the Court has found an ERISA violation. See, e.g., Mendez v. Teachers Ins. & Annuity Ass'n and College Retirement Equities Fund, 982 F.2d 783, 789-90 (2d Cir. 1992) (prejudgment interest discretionary in ERISA cases and should be awarded only when such relief is "fair, equitable and necessary to compensate the wronged party fully"). Id. Rather, the question is whether plaintiff may bring a separate cause of action for interest on benefits which have been paid after a period of delay.

1. Interest on Delayed Benefits Is Recoverable Under ERISA § 502(a)(3)

Plaintiff brings his eighth claim for relief pursuant to ERISA § 502(a)(3),*fn45 which authorizes civil actions by a participant, beneficiary or fiduciary "(A) to enjoin any act or practice which violates [ERISA] or the terms of the plan, or, (B) to obtain other appropriate equitable relief" to remedy such violations or to enforce any provisions of ERISA or the terms of the plan. 29 U.S.C. 1132(a)(3). While the Second Circuit has not decided the question of whether interest on delayed benefit payments is available as "other appropriate equitable relief" under ERISA § 502(a)(3)(B), the Third and Seventh Circuits have answered that question in the affirmative. See Holmes v. Pension Plan of Betlehem Steel Corp., 213 F.3d 124, 131 (3rd Cir. 2000); Fotta v. Trustees of the United Mine Workers of America, Health & Ret. Fund, 165 F.3d 209, 214 (3rd Cir. 1998); Clair v. Harris Trust and Sav. Bank, 190 F.3d 495, 497-98 (7th Cir. 1999), cert. denied 528 U.S. 1157 (2000).

Moreover, the Second Circuit has held that a widow may sue under ERISA § 502(a)(3)(B) for the sum of money that she should have received upon her husband's death because her claim sought "make whole" relief which Congress regards as equitable. Strom v. Goldman Sachs & Co., 202 F.3d 138, 149-50 (2d Cir. 1999).*fn46

The question of whether interest on delayed benefit payments is available as "other appropriate equitable relief" under ERISA § 502(a)(3)(B), has been addressed by the district court in Dunnigan v. Metropolitan Life Insurance Co., 99 F. Supp.2d 307, 321 (S.D.N Y 2000), appeal docketed, No. 00-7399 (2d Cir. 2000). Relying on Strom, the Dunnigan court concluded that actions for interest on delayed benefit payments are appropriate under ERISA § 502(a)(3)(B) where plan participants establish an underlying breach of ERISA or the plan documents by a plan fiduciary. See Dunnigan, 99 F. Supp.2d at 321. For the reasons stated by the Dunnigan court, we conclude that interest on delayed benefit payments is recoverable under ERISA § 502(a)(3)(B). See also, Gustafson v. Kennametal, Inc., 2001 WL 25722, at *6-7 (S.D.N.Y. 2001) (interest on delayed benefit payments available under ERISA § 502(a)(3)(B) to prevent unjust enrichment) (citing Dunnigan).

2. Interest Recoverable Only on Individualized Basis

While interest on delayed benefits may be awarded under ERISA § 502(a)(3)(B), awarding restitution is an equitable remedy, and is subject to equitable defenses such as laches. See Dunnigan, 99 F. Supp.2d at 325 (citing Fotta, 165 F.3d at 214). For this reason, the Dunnigan court concluded that a class action format is not suitable for the individualized treatment required for the exercise of equitable powers. See 99 F. Supp.2d at 325-26. See also Holmes v. Pension Plan of Bethlehem Steel Corp., 1999 WL 54591, at *8-10 (E.D.Pa. 1999) (claim for interest on delayed benefits "unsuitable for class treatment"), aff'd in part and rev'd in part on other grounds, 213 F.3d 124 (3rd Cir. 2000). That aspect of the Dunnigan court's decision has been cited with approval in this district. See Miner v. Empire Blue Cross/Blue Shield, 2001 WL 96524, at *5 (S.D.N.Y. 2001) (holding that plaintiff could not maintain class action seeking lost interest and other relief) (citing Dunnigan). The briefs before us provide no persuasive reason to depart from Judge Scheindlin's careful analysis in Dunnigan.

Accordingly, defendants' motion for summary judgment is granted to the extent that plaintiff's seventh claim seeks class relief for interest on delayed benefit payments. It is unclear from the record before us, however, whether plaintiff has received delayed benefit payments himself. To the extent that plaintiff seeks interest on any such payments as a result of breaches of ERISA or the Plan,*fn47 the defendants' motion for summary judgment is denied, and plaintiff may seek such individual relief, if any.

F. Plaintiff's ERISA § 104(b)(1) Claims

ERISA § 104(b)(1) requires plan administrators to furnish certain information to plan participants and beneficiaries. See 29 U.S.C. § 1024 (b)(1). Plaintiff's ninth claim for relief alleges that defendants have failed to update the 1992 SPD in violation of ERISA § 104(B)(1), which requires plan administrators to provide an updated SPD to each participant and each beneficiary receiving benefits under the plan every five years, except when no amendments have been made to a plan during the proceeding five years. Compl., ¶¶ 80-82. Plaintiff's tenth claim for relief alleges that the 1995 Plan Amendment was a "material modification" of the Plan and that defendants failed to furnish a copy to each participant and beneficiary within 210 days after the end of the plan year in which the change was adopted, as required by ERISA § 104(b)(1). Compl., ¶¶ 84-88. Defendants' motion for summary judgment on both claims is granted.

There is no dispute that the Plan was amended in 1995, Defs.' 56.1 Statement, ¶ 13, and that defendants issued an updated SPD in January, 1999, seven months before this lawsuit was commenced.*fn48 Pauk Aff. in Opp'n, ¶ 27-28; Defs.' Mem. p. 22; 1999 SPD, A540-575; Compl. dated Aug. 19, 1999. Thus, there is no dispute that defendants' provided a copy of the 1999 SPD within 5 years of the date of the 1995 Amendment, but not within 5 years of the 1992 SPD, as is required by ERISA § 104(b)(1). We note that plaintiff seeks only declaratory relief on his ninth claim, Compl. p. 35, Prayer for Relief ¶ 11. While the ninth claim is pled as a class claim, the declaratory relief requested can clearly be provided without considering class certification. Moreover, as defendants have now provided an updated SPD to all plan participants and beneficiaries, it appears to the Court that plaintiff's ninth claim is moot. Accordingly, defendants' motion for summary judgment on plaintiff's ninth claim is granted.

Likewise, while it is clear that defendants failed to furnish a copy of the 1999 SPD within 210 days after the plan year in which the 1995 Amendment was passed, defendants have now provided the requisite notice in the 1999 SPD. Accordingly, plaintiff's tenth claim for relief also appears to be moot, and defendants' motion for summary judgment is granted on plaintiff's tenth claim for relief.*fn49

CONCLUSION

For the reasons stated, plaintiff's motion for summary judgment is denied as to plaintiff's first and second claims for relief and is granted as to his eleventh claim for relief.

Similarly, defendants' motion is denied as to plaintiff's fifteenth, sixteenth and seventeenth claims for relief and granted as to plaintiff's first, second, sixth, seventh, ninth, tenth and nineteenth claims for relief. Plaintiff's third, fourth, fifth, twelfth, thirteenth, and fourteenth claims are dismissed, by agreement of the parties, either as moot or as abandoned by the plaintiff. Further, defendants' motion for summary judgment is granted in part and denied in part with respect to plaintiff's eighth and eighteenth claims for relief, as stated in this opinion. Finally, defendants' motion for summary judgment on statute of limitations grounds is granted in part and denied in part as stated in this opinion.

CONFERENCE

Counsel are directed to appear for a conference with the Court on Wednesday, April 25, 2001 at 3:30 p.m. at the United States Courthouse, 500 Pearl Street, New York, New York, in Courtroom 21A. Counsel should have authority to fully discuss all aspects of the litigation, including settlement.

IT IS SO ORDERED.


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